Scotland's National Strategy for Economic Transformation - Delivery Plans October 2022

Programme 5: A Fairer and More Equal Society

Outcomes & Objectives

As world events have emerged including Brexit, COVID-19, and the economic and inflationary consequences of Russia's invasion of Ukraine, the labour market has responded. NSET remains a 10-year strategy, but the next period may require a tailored short-term labour market response. Currently Scotland's labour market remains tight, with unemployment rates at or close to record lows and demand for labour historically high. There are recent signs that vacancy growth has slowed and real earnings have declined due to high rates of inflation.

Employability services aim to help those furthest from the labour market into employment. Long term unemployed (12 months plus) account for nearly a third of all unemployed. It is estimated 33,400 people were long term unemployed in 2021, more than in 2019 (pre-pandemic). In 2021, there were also an estimated 815,200 economically inactive people (16-64 years) in Scotland.

Latest forecasts (pre-dating significant UK government policies) suggest the UK economy may enter recession late 2022 with the unemployment rate (UK wide) rising from the middle of next year reaching above 6% in late 2025.

Impacts would be felt differently across regions, sectors and workforce groups and may lead to reduced security of pay and hours for the workforce. Women and young people are already more likely to be employed in jobs with low pay.

The Scottish Government's commitment to promote payment of the real Living Wage stands as an important cost of living policy to deliver a fairer and more equal society, and as such we still intend to bring forward the requirement to pay the real Living Wage in public sector grants. We will keep the labour market outlook under review and stand ready to adapt our plans in this programme accordingly.

Our aim remains to reorient our economy towards wellbeing and fair work; to deliver higher rates of employment and wage growth, including for those who may face challenges in accessing the labour market; to significantly reduce structural poverty, particularly child poverty; and improve health, cultural and social outcomes for disadvantaged families and communities, particularly those in our rural and island areas.

Our aim is to create a society that is thriving across economic, social and environmental dimensions, and that delivers prosperity for all Scotland's people and places. A fair and equal society and a wealthier, greener economy are mutually reinforcing. Economies that have stronger productivity growth also have higher wellbeing – good businesses recognise that well-paid and respected workers are productive workers.

We will expand Scotland's available talent pool, at all skills levels, to give employers the skills pipeline they need to take advantage of opportunities and systemically address Scotland's labour market inactivity challenges.

Projects

Project 14: Tackle Poverty through Fairer Pay and Conditions

This will see a strengthening of the application of Fair Work conditionality to grants, requiring payment of real Living Wage, and channels for effective workers' voice starting from Summer 2022. There will also be a focus on delivery on the commitment to require payment of the real Living Wage in the Scottish Government contracts from October 2021.

We will also work with employers and trade unions in sectors where low pay and precarious work can be most prevalent (including leisure and hospitality, and early learning and childcare) to promote sectoral fair work agreements and collective bargaining. This will be with the aim to achieve higher standards of pay, better security of work, and greater union representation in each sector.

How business operates is also critical and we will build on the findings from the Business Purpose Commission Report in Spring 2022, to inform how businesses can deliver positive impacts on prosperity, wellbeing and environmental sustainability.

Project 15: Eradicate Structural Barriers to Participating in the Labour Market

Our refreshed Fair Work action plan will set out the further steps we will take to remove barriers to employment and career advancement for disabled people, women, and people from minority ethnic groups.

The key projects within NSET related to employability and eradicating structural barriers to participating in the labour market include:

• Simplify the employability system by implementing No One Left Behind.
• Build on the principles of the Young Person's Guarantee, developing an all-age guarantee of support for those most disadvantaged in the labour market.
• Support parents to increase income from employment.
• Systemically address Scotland's labour market inactivity challenges, recognising that Scotland's inactivity rate has been consistently higher than the UK since 2016.
• The gap in economic participation between the UK and Scotland could continue to increase over the next 5 years and may be exacerbated by Scotland's changing demographics. A future Scotland may not have enough people of working age to replace those leaving the labour market as they grow older and less healthy, and without more working age people, pressures on fiscal sustainability, tax revenues, public services and welfare will increase.

Addressing Scotland's Labour Market Inactivity challenges has moved from Skilled Workforce to A Fairer and More Equal Society since the publication of the Plan on 1 March 2022 as the actions better align with Eradicate Structural Barriers to participating in the labour market.

Measurement

Metrics for measurement of this Programme include:

Project 14:

• National Performance Framework – Fair Work and Business indicators.
• Fair Work monitoring will be developed as part of refreshed Fair Work Action Plan and new Ethnicity Pay Gap Strategy.
• The Procurement Reform (Scotland) Act 2014 requires public bodies to set out in their corporate procurement strategy how they will comply with the sustainable procurement duty and their approach to payment of the living wage in procurement. Public bodies are then required to report on compliance with their strategies through an annual procurement report. These requirements are expected to provide better information on how each public body is using procurement activity to achieve its wider aims including Fair Work. They are also used as the basis for an Annual Report on Procurement Activity in Scotland.

Project 15:

• The Employability Shared Measurement Framework, published in April 2022, aims to create a common understanding of how we measure the impact of employability services for the people and areas they aim to support. By supporting a shift from multiple separate approaches to measuring success, to a consistent view of what is working for people at national, local and individual levels, the Framework will ensure accountability through transparency of data and support improvement across Scotland's employability system, building on existing practice that is currently established in each Local Authority area. All activity that contributes to measurement of employability, whether it is data collected by services, information reported nationally, or independent evaluation will be driven by the Framework. The Framework is not a final product and more work is required to develop certain areas and themes. To date, it has made recommendations on which data needs to be collected to answer some of the key questions on the themes of Reach (of services) and Progression.
• Local Authorities report participant data to Scottish Government for those accessing employability support delivered under the No One Left Behind approach, covering information on the characteristics of those reached and how they have progressed, including whether they have entered and sustained employment, and Further / Higher Education. This reporting is aligned to the data recommendations made by the Shared Measurement Framework.
• Quarterly statistics are published which provide an overview of performance of devolved employment services, including Fair Start Scotland and the No One Left Behind approach. Fair Start Scotland evaluation reports are also published annually, and include commissioned research with service users, delivery partners and providers, as well as ongoing analysis of performance. The next quarterly statistical publication is due in November 2022, and the next evaluation reports are scheduled to be published in Spring 2023.
• We have scoped a multi-year programme of evaluation for the No One Left Behind approach (including local delivery of Young Person's Guarantee activity). We are currently in the early stages of working with Ipsos to establish the first year of activity. The implementation evaluation report is expected in March 2023.
• National Performance Framework – Fair Work and Business indicators, supported by a monitoring framework being developed as part of refreshed Fair Work Action Plan and new Ethnicity Pay Gap Strategy.
• Metrics for measuring success are currently being developed for the labour market inactivity challenges. These will be included in the NSET Accountability Framework expected to be published in Autumn 2022.

NSET Phase: Delivered by 31 October 2022

Project 14:

• The Scottish Government mandates the payment of the real Living Wage in contracts where possible. One of the Scottish Government flagship procurements that will demonstrate this approach following its introduction in October 2021 is the National Civil Engineering Framework. This has an estimated value of £600 million over 4 years. The advert (contract notice) for the framework was published in June 2022.
• The Business Purpose Commission for Scotland launched its report Now is the time for purpose: Putting purpose at the heart of Scottish business on 28 June 2022. The report is comprehensive, and makes recommendations for a range of stakeholders across business, governments, and tertiary education and training organisations. The Scottish Government is considering the recommendations carefully, with particular focus on the two recommendations for the Scottish Government to lead. This requires significant cross-government engagement and we look forward to sharing our response when complete.

Project 15:

• Best Start, Bright Futures: Tackling Child Poverty Delivery Plan 2022 - 26 was published 24 March 2022, and details actions the Scottish Government will take to both support parents into work, and support those already in work to increase their incomes and lift themselves and their families out of poverty.
• Phase 2 of No One Left Behind was implemented in April 2022, marking a significant step forwards in simplifying the employability landscape and delivering greater flexibility for local areas to determine service provision based on the needs of users in their area and of local labour markets.

NSET Phase: In Delivery

Project 14:

• Delivery Publication of refreshed Fair Work Action Plan which will set out detail of further actions including appropriate focussed actions and funding to address structural inequalities in the workplace Autumn 2022.
• We expect to award the Civil Engineering Framework by February 2023 and for the Framework to commence in March 2023.
• Apply Fair Work conditionality to grants, requiring payment of real Living Wage, and channels for effective workers' voice.
• Sectoral Fair Work agreements being taken forward through the Retail Strategy launched in March 2022 and the National Care Service, Bill laid June 2022.

Project 15:

• The implementation evaluation report for the No One Left Behind approach (including Young Person's Guarantee) is expected in March 2023.
• The Ethnicity Pay Gap Strategy is in development, and expected to be published Autumn 2022.
• Activity to deliver the Parental Employment Support Fund (PESF) as part of the wider No One Left Behind approach is ongoing.

NSET Phase: Delivery Pending

Project 15:

• The next No One Left Behind Delivery Plan is due to be published by the end of March 23. This plan will set out the milestones which we will work with partners to deliver between now and March 2026, including:
• Going further with our work to embed the 'Scottish Approach to Service Design', ensuring service users are empowered to contribute to the design and delivery of the services and policies that affect them:
• Building on the initial iteration of the Shared Measurement Framework (published April 2022), ensuring data improvement is an ongoing priority and that we can determine the impact of our investment in employability;
• Determining and then delivering the scope, approach and scale of the next iteration when future delivery of devolved employment services expire.
• Implementation of Actions within Fair Work Action Plan post-publication.
• Milestones and expected outcomes set out in refreshed Action Plan Autumn 2022.
• Annual progress reporting.

With Scotland's unemployment rate at record lows, and employment high, increasing economic participation will require supporting those furthest from the labour market to reach their potential. The barriers to employment are complex, and key areas of focus are likely to be around health (with physical and mental wellbeing a key driver for economic inactivity), improving opportunities for flexible working (especially for older workers), and supporting those with caring responsibilities. That's why we are looking at a whole government approach to tackling these issues, as well as considering how the Scottish Government can play a role in alleviating labour shortages.

NSET Phase: In Development

Development underway

Project 14:

• Further Sectoral Fair Work Agreements building on existing arrangements and work already underway across sectors for instance in Retail and Adult and Social Care. The Scoping phase of this action will begin 31 January 2023, including to:
• Review of the current landscape to map what agreements, concordats, charters etc. already exist across sectors of the economy, their scope, benefits, limitations and legal status.
• Establish current understanding of role, purpose and potential of sectoral fair work agreements here and abroad and how Fair Work Agreements relate to collective agreements.
• Engage key external stakeholders to gauge their understanding and expectations of Fair Work Agreements and relationship to collective agreements, and identify areas for further development.

Project 15:

• Work is underway to design the next phase of No One Left Behind, with consideration being given to the scope, approach and scale of the next iteration when delivery of existing devolved employment services expire.
• We will be working with Local Government and a range of partners to agree how best to deliver key actions within Best Start Bright Futures in the wider context of our No One Left Behind policy.

Working with Stakeholders & Partners

Who are we relying on for delivery of the programme?

Through our partnership with Local Government and the network of Local Employability Partnerships we will continue to support a mixed economy of service provision involving the broader public, third and private sectors.

Who are we involving and how (partners/stakeholders)?

• Employers, Trade Unions, Representative groups (e.g. Fair Work Action plan Stakeholder working groups – focus on Gender, Disability, Race and Ethnicity), Fair Work Convention.
• External Convention of Scottish Local Authorities (COSLA) Scottish Local Authority Economic Development Forum (SLAED) (Local Authority) SOLACE (Local Authority) Local Employability Partnerships (LEPs) Third Sector (TSEF) Private Sector, Public Sector (e.g. Health Boards), People with Lived Experience (i.e. Parents experiencing poverty), Employers.
• Internal Employability Policy Colleagues, OCEA Employability Analysis, Fair Work and Skills Policy Colleagues, Child Poverty Colleagues, Early Education and Childcare Colleagues, Transport Scotland Colleagues.
• Initially the economic inactivity project will focus on existing programmes of work within the SG and partners involved in delivering those, and how these can be improved to ensure that the economically inactive population is supported back into activity using existing stakeholder and delivery networks. Colleagues across SG (policy and analytical) using their existing stakeholder networks e.g. Local Authorities through No One Left Behind, Glasgow Disability Alliance and Inclusion Scotland through the Disability Employment team, Early Learning and Childcare, Transport Scotland, Public Health Scotland, the economically inactive population, employers, Strategic Partnership Managers in DWP.

Who and where will benefit (people, places and sectors)?

• Employees and workers, Employers and the Economy across Scotland and all sectors – in particular those sectors where low pay and precarious work can be most prevalent.
• Parents within the six priority families (lone parents, disabled, minority ethnic families, families with 3+ children, families in which the youngest child is aged <1, Mothers <25), People facing barriers to entering the labour market, across all 32 local authority areas.
• People who are economically inactive and people who are at risk of becoming economically inactive with a particular focus on those with long term health conditions, people with a disability and people with caring responsibilities. Economic inactivity rates vary across local authorities and addressing inactivity in these areas will reduce inequalities.

Governance

A dedicated Fairer and More Equal Society Programme Board has been established to oversee and provide assurance over delivery within this programme. Its membership includes representation from COSLA and SOLACE as well as external experts and delivery partners.

Project-level delivery will be overseen through existing internal governance for Fair Work, the Fair Work Steering Group, and through the introduction of an All-Age Employability

Programme Board by the end of 2022 which will be responsible for delivering those actions which relate to Project 15: Eradicate Structural Barriers to Participating in the Labour Market. Employability specific actions within Best Start, Bright Futures: Tackling Child Poverty Delivery Plan are monitored through the Child Poverty Programme Board.

Delivery phased timeline

This timeline provides the pipeline of activity and planned milestones as it stands. As budgets become clearer and time progresses other projects and milestones will be added and timelines updated.

Phase 01: What we have delivered to date

Mar 2022

Best Start, Bright Futures: Tackling Child Poverty Delivery Plan 2022-2026 published

Apr 2022

Phase 2 of No One Left Behind implemented

Jun 2022

Business Purpose Commission for Scotland published ‘Now is the Time for Purpose: Putting Purpose at the Heart of Scottish Business’.

Jun 2022

National Civil Engineering Framework advert (contract notice) published

Phase 02: What we are already doing

Feb 2023

National Civil Engineering Framework awarded

Mar 2023

Publish a multi-year delivery plan for No One Left Behind 2023-2026

Mar 2023

National Civil Engineering Framework commences

Phase 03: What we are planning to deliver

Apr 2024

Publish update to the Shared Measurement Framework