Scotland's Labour Market Strategy

Executive Summary

Our labour market is the beating heart of Scotland's economy - its strong performance is central to our prosperity and success. This Strategy sets out for the first time how our labour market and wider social and economic policies interact to drive our ambitions for inclusive growth. We know that creating a fairer society is not just a desirable goal in itself, but is essential to the sustained, long-term prosperity of the Scottish economy.

This Strategy provides a framework for our approach to the labour market, and describes the actions we will take to deliver our vision.

That vision is for:

"A strong labour market that drives inclusive, sustainable economic growth, characterised by growing, competitive businesses, high employment, a skilled population capable of meeting the needs of employers, and where fair work is central to improving the lives of individuals and their families."

This vision is consistent with Scotland's Economic Strategy which is focused on the complementary goals of boosting competitiveness and tackling inequality. It is an approach supported by a growing body of international evidence which shows that countries with more equal societies typically enjoy stronger, more sustainable growth over the long run. Therefore, we believe that promoting growth in employment opportunities and tackling inequality within the labour market are not mutually exclusive. In fact, we believe that tackling inequality is essential to the sustained, long-term prosperity of the Scottish economy.

Scotland's labour market

Scotland's economy has many strengths. We have a highly-skilled workforce, and our labour market has remained resilient over the last few years despite considerable economic challenges. However, there is much more to be done to address both the immediate uncertainty in the current economic climate, as well as the long-term structural issues facing our labour market.

Our evidence and analysis ^[2] tells us that there are a number of key factors affecting performance in the labour market. These include in-work poverty, job quality, inequality of access to labour market opportunities and poorer outcomes for disadvantaged groups and those furthest from the labour market.

Changing demographics such as our ageing working population, globalisation and advances in technology also have implications on our strategic approach going forward, creating both challenges in terms of skills and training, but also opportunities in sectors and for specific types of jobs.

Our approach must be one of adaptability and resilience, focused on delivering fair work and jobs. Within this framework we have identified five priority areas to deliver our vision:

• promoting the Fair Work Framework and encouraging responsible business;
• supporting employability and skills, so that all of our people can participate successfully in the labour market;
• investing in our people and our infrastructure;
• fostering innovation including workplace innovation which will help spur job creation; and
• promoting Scotland internationally to improve the competitiveness of our businesses.

Strong evidence exists on the link between employment and improving outcomes across a number of dimensions of Scotland's social and economic performance including health, crime, deprivation, social mobility and tackling poverty, so we all stand to benefit from getting this right. We want this Labour Market Strategy to be a shared agenda across our partners, and stakeholders.

Strengthening inclusive growth

A central part of any active labour market strategy must be considering how we influence both elements of the supply of, and demand for, skills and employment. The success of this Strategy, therefore, will be closely tied into our significant educational reforms such as tackling the attainment gap, reforming colleges and implementing Developing the Young Workforce ( DYW). Our education system, along with the range of employability and training opportunities provided across the country, must ensure that all of our people are equipped with the skill sets and attributes to successfully take part in our changing and evolving economy.

Assessing future needs

We need to ensure we have the right mechanisms in place to support businesses to grow and we want our delivery bodies to work effectively with employers, industry leads and other experts to anticipate future job growth, assess skills needs and to strengthen the systems that support workforce planning. This will ensure that we have the right skills and are responsive enough to adapt to future changes in our economy.

Delivering the change

In delivering the change, we are implementing a wide range of policies which will support the labour market, these include commitments to:

• use our new powers to better align employability support in Scotland to encourage sustainable and fair work with a focus on supporting those who need most help to reduce inequality;
• fully endorse the Fair Work Framework, produced by the Fair Work Convention earlier this year, and we have set out actions aimed at building momentum around the promotion of fair work. We will continue our support for the Convention with up to £500,000 this year and will work closely with them to deliver their vision over the coming years;
• provide £200,000 to Business in the Community Scotland to support the Scottish National Action Plan for Responsible Business;
• continue our support for the Poverty Alliance to meet our target of 1,000 accredited Living Wage employers by autumn 2017, and working with the Fair Work Convention and others to look at wider aspects of pay policy such as pay ratios and gainsharing approaches;
• continue to help people to stay in work recognising the benefits of healthier working lives and delivering our Health Works Strategy;
• be innovative in supporting those facing barriers in the workplace through initiatives such as a project to help women returners back into the workplace;
• reach out to businesses, local authorities and others to support economic growth and show how we can work together to achieve greater productivity through fair work; and
• work through the Enterprise and Skills Review to ensure our delivery bodies are best able to support productivity and inclusive growth, with a focus on boosting innovation and improving their competitiveness nationally and internationally, while also continuing to support people to get the skills they need to participate in the labour market and access good employment.

Defining success and ensuring progress

It is important that we are able to measure progress against clear outcomes, so we will focus on delivering a labour market where there is:

• a skilled, productive and engaged workforce capable of meeting the needs of employers;
• equality of opportunity to access work and to progress to ensure everyone is able to maximise their potential;
• fulfilling, secure and well-paid jobs, where employees' contributions are encouraged, respected and valued;
• low unemployment and high employment; and
• an economy that supports a sustainable working population and that can retain and attract new talent, to meet our wider economic and social ambitions.

To ensure successful delivery of the outcomes set out in this Strategy, we will:

• improve the range and quality of labour market data and develop new labour market indicators which will set out a more comprehensive view of how we are able to assess progress in the labour market within the context of our vision and the five outcomes above;
• work with the Fair Work Convention to develop employment and work quality indicators that will allow us to track changes in the labour market over time as it relates to fair work; and
• establish a Strategic Labour Market Group which will work alongside the independent Fair Work Convention, to advise Ministers on future developments in the labour market. This Group will contain members drawn from the trade unions, business, the third and public sectors and academia and will ensure that our Strategy is delivered and remains responsive to any changing circumstances. It will inform future policies and advise on how best to deliver our vision as new challenges emerge.

Considering equality

Finally, our commitment to equality is core to the framework and to the actions outlined in this Strategy. The economic analysis underpinning it included an assessment of the issues facing equality groups. In preparing this Strategy we also consulted with various stakeholders, including those that represent equalities groups.

The Labour Market Strategy has a strong focus on promoting equality and tackling inequality through the promotion of inclusive growth. Any proposals set out here that may be developed into specific policies and plans will be impact assessed separately to accurately gauge their impact on equalities issues.

Supporting Fair Work

We share the vision of the Fair Work Convention that by 2025, people in Scotland will have a world-leading working life where fair work drives success, wellbeing and prosperity for individuals, businesses, organisations and society. This vision challenges not only business, employers, unions and the third sector but has clear actions for government.

We fully endorse the Convention's Framework and will work with them to embed its principles in workplaces across Scotland. We will continue to raise awareness with employers in the public, private and third sectors of the benefits of fair work, promote the Fair Work Framework and champion fairer, better workplaces.

With the Convention we will develop products and services that will support organisations to adapt their workplaces and realise our shared vision. We will ensure that our delivery bodies have a responsibility to adopt and promote the Fair Work Framework, supporting the Convention in its future role, and creating a platform to showcase how fair work can support business, organisation and individual success.

Through our public contracts we will continue to encourage public bodies to promote fair working practices for those who work on public contracts. In order to ensure that the messages in our statutory guidance on 'Addressing Fair Work Practices, including Living Wage, in Procurement' are embedded into practices and procedures and effectively applied in a relevant, proportionate and non-discriminatory way, we will work in partnership with public bodies to develop examples of best practice. Through the Convention we will develop measures of fair work that will allow us to track the impact of the Framework and we will recognise those employers who champion fair work as part of their business model by supporting the Scottish Business Awards Fair Work Employer of the Year Award.