Future skills: action plan

Supporting Evidence: Long-standing challenges facing the labour market

Quality of Work

Despite strong headline labour market results, there are signs of fragility around the quality of work in our labour market. The proportion of Scotland's workforce in full time work in 2018 remains below the pre-recession rate and has declined over the past 2 years^[1].

And although the past decade has seen strong growth in roles defined as medium to high skill level^[2], analysis by the OECD concludes that employment growth in the UK between 2010-2017 was driven by sectors with below average productivity and wages^[3].

A prolonged period of slow wage growth is reflected in the latest poverty data. Data for 2015-18, showed 60% of working-age adults in Scotland living in relative poverty after housing costs lived in working households - the highest on record.

The Scottish Government is already acting to mitigate these challenges through our progressive Fair Work agenda, including the real Living Wage, and the Scottish Business Pledge. An initial assessment, published in the Tackling Child Poverty Progress Report, suggests that the Scottish Government invested over £1.4 billion in 2018-19 to support low income households. This includes the £100 million we invest each year to mitigate the worst impacts of UK Government welfare reforms."

This plan will build on these commitments and support our goal of delivering good work through employment that is fulfilling, secure and well-paid.

Demographics

Scotland's population growth has traditionally been slower than the UK as a whole, and this is expected to continue. National Records Scotland's projections for 2016 - 2041 suggest that driven by relatively low birth rates and inward net migration, Scotland's working age population is only expected to grow by 1% compared with 8% in the UK^[4].

Although migration to Scotland has to date eased some of the pressures resulting from an ageing population, this slowed over the year to 2018 - ending a period of growth since the EU expansion in 2004^[5].

Our ageing population presents challenges to labour supply and as the average age of our workforce increases, it is likely that the need to provide retraining and upskilling opportunities for older workers will rise substantially.

Inequalities

We must ensure that individuals across Scotland can maximise their potential and make a positive contribution to Scotland's future. That means supporting a more inclusive and diverse workforce with participation and progression in the labour market for all regardless of gender, age, race or disability. In Scotland there are persistent differences in employment and pay by gender, race and disability status.

In 2018, the gap between the employment rates of men and women was 7.7 percentage points, between disabled and non-disabled people it was 35.5 percentage points., and between white people and people from minority ethnic groups, it was 19.7 percentage points^[6].

The median gender pay gap in Scotland for full time workers is currently 5.7% in favour of men and rises to 15% when part-time workers are included^[7]. Disabled people and people from minority ethnic groups also tend to earn less than non-disabled people and the white population^[8].

We know that increasing skills levels can make a difference to these disparities, for example, the disability employment gap is much lower when disabled people hold a degree or equivalent level qualification.

1. Regional employment patterns in Scotland

2. Regional employment patterns in Scotland

3. OECD Compendium of Productivity Indicators

4. Projected Population of Scotland (2016-based) | National Records of Scotland (nrscotland.gov.uk)

5. National Records of Scotland: Statistics and Data - Migration Flows

6. Scottish Government: Regional employment patterns in Scotland: statistics from the Annual Population Survey 2018

7. The gender pay gap for all workers is higher than the gender pay gap for full-time workers because a higher proportion of female workers are part-time workers, who tend to earn less per hour than full-time workers

8. Scottish Government: Regional employment patterns in Scotland: statistics from the Annual Population Survey 2018