Scotland's Labour Market Strategy

5. Defining Success and Ensuring Progress

Our vision as set out in this Strategy 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.

To achieve our vision we have identified five outcomes that provide the strategic framework that we will use to measure and ensure the progress we wish to see within the labour market.

• 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.
• An economy that supports a sustainable working population and that can retain and attract new talent, to meet our wider economic and social ambitions.

These outcomes do not sit in isolation, they are interdependent and they all have an important role to play in meeting our vision and, moving forward, they will be used as a framework to guide and deliver our actions.

Our vision and outcomes for the labour market support the over-arching Purpose of the Scottish Government to focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.

Delivery of this Purpose is measured by the National Performance Framework ( NPF). ^[26] The NPF measures and reports progress in Scotland across a wide range of indicators measuring national and societal wellbeing, incorporating a range of economic, social and environmental indicators and targets. The Purpose Targets that guide the NPF are of direct relevance to this Strategy:

• Productivity - Productivity in Scotland has risen relative to the UK and in real terms since 2007. The gap in productivity between Scotland and the best-performing countries in the OECD has been largely unchanged in recent years.
• Participation - Scotland has the second highest employment rate among the four countries of the UK. Scotland also has the thirteenth highest employment rate in the OECD.
• Population - The population of Scotland is now at its highest ever. Since 2007 Scotland's population has growth by 0.5 per cent a year on average, faster than in the EU-15 as a whole (0.4 per cent a year).
• Cohesion - The gap in labour market participation between Scotland's best- and worst-performing regions has been reduced between 2014 and 2015 - although the gap remains larger than it was prior to the recession.
• Solidarity - Overall, levels of income in Scotland are rising, however, the proportion of income received by the bottom 40 per cent income deciles has remained largely unchanged since 2005‑06.
• Sustainability - Greenhouse gas emissions in Scotland were 45.8 per cent lower in 2014 than the baseline period, exceeding the percentage reduction required to meet the statutory target (42 per cent) and outperforming the percentage reduction required to meet an 80 per cent reduction in 2050.

Delivery of the Purpose and Purpose Targets is supported by sixteen National Outcomes. Our ambitions for the labour market are articulated in the following National Outcome within the NPF:

"We realise our full economic potential with more and better employment opportunities for our people."

More broadly, delivery of our labour market outcomes will be vital in achieving a range of national outcomes spanning areas including business and the economy, health, justice and tackling inequality.

These outcomes and targets set out our ambition. Delivery against them is measured by an array of statistical information and performance indicators. In particular, three labour-market indicators have recently been added to the NPF, focusing on reducing underemployment, reducing the proportion of employees earning less than the Living Wage and reducing the gender pay gap. Moving forward, we will marshal and improve this performance information to ensure effective delivery of this Strategy.

Improving our approach to measurement

Our evidence base and level of understanding of these issues continues to grow through the Fair Work Convention, the FITwork programme and a range of other developmental work being undertaken by organisations such as Oxfam.

Building on these and other research in this area, we will seek to measure our performance against the five outcomes, drawing where appropriate on relevant labour market indicators from the NPF and from broader sources.

These new sources will include working 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.

This will be especially helpful in tracking progress towards:

• delivering equality of opportunity to access work and to progress to ensure everyone is able to maximise their potential; and
• to having fulfilling, secure and well-paid jobs, where employees' contributions are encouraged, respected and valued.

As part of this work we will review the data sources available, looking to establish where any gaps may exist, to ensure we have the most accurate possible picture of the labour market. We are committed to collecting good quality data surrounding the labour market and will work with relevant bodies to achieve this.

We will develop a more comprehensive approach to how we are able to measure progress - within the context of our vision and our five outcomes and consider how this is then presented through the National Performance Framework.

Overseeing delivery and development of the Strategy

Through our engagement in developing this Strategy there was a strong focus on the importance of adaptability and resilience to meet future challenges in a changing world. That is why this Strategy is an open framework, and while we highlight key actions and priorities these are not the limit of our ambitions.

This Strategy anticipates some of the continuing economic and social changes that will impact on our labour market. But this situation is dynamic and uncertain. That is why we are establishing a mechanism to ensure that our strategy remains relevant and achievable in an often turbulent and ever-changing economic climate.

To assist Ministers in that, we will establish a Strategic Labour Market Group with a membership drawn from business, the third and public sectors employers, from trade unions, from education and skills representatives and from academia. This Group is necessary to ensure that key partners are engaged in an ongoing dialogue about labour market issues which evolves over time. It will advise Ministers on how to respond to future changes and ensure that our partners are engaged in future decision making.

The Group, which will work alongside the independent Fair Work Convention with its refreshed remit, will draw on the experience of the other bodies and groups who are already working in related areas to ensure that it brings a cohesive approach to the consideration of issues surrounding the labour market. This is essential to give an wider overview of activity in a way which does not currently exist.

The Group will work with Ministers to review, mitigate and flex our approach and develop future interventions so that this Strategy remains current, adaptable to change and delivers a fair, inclusive and successful labour market in Scotland.