Scotland's National Strategy for Economic Transformation Programme 5: A Fairer and More Equal Society Equality Impact Assessment (Record and Results)

Our Programme of Action

Programme 5 will include the below listed projects and actions.

No. 14 Tackle poverty through fairer pay and conditions

• Apply Fair Work conditionality to grants, requiring payment of real Living Wage, and channels for effective workers' voice by summer 2022, and determine how these conditions can be applied to non-departmental public bodies. Fair Work conditionality will be further extended with clear standards and minimum requirements to cover all forms of Scottish Government support within the limits of devolved competence in line with the landmark agreement with the Scottish Green Party. We will use all levers at our disposal to deliver on this commitment – including the use of grants, reliefs and licencing provisions.
• Deliver on the mandate to require payment of the real Living Wage in new Scottish Government contracts from October 2021, including the suite of new construction frameworks, starting with the £600 million Civil Engineering Framework.
• 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 to achieve higher standards of pay, better security of work, and greater union representation.
• 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. This will recognise that businesses which take a long term (inter-generational) view of their stakeholder commitments fare better in times of crisis, including during the Covid pandemic. It will also promote the stakeholder capitalism model with business leaders, encouraging businesses to see employees, communities and citizens as stakeholders as well as consumers.

No. 15 Eradicate structural barriers to participating in the labour market

• Set out how we will support parents to increase their incomes from employment as part of cross-government action to deliver upon the ambitious targets set through the Child Poverty (Scotland) Act 2017 within the next Tackling Child Poverty Delivery Plan to be published at the end of March 2022.
• Ensure that Every Contact Counts in delivering an aligned and integrated offer of support for those seeking to move towards, into or progressing within the labour market. In this way we will ensure that individuals and families have access to the advice and services they need to thrive, including housing, health, affordable and flexible childcare and transport offers.
• Simplify the employability system by implementing No One Left Behind, combining funding streams and transferring investment from national to local governance to enable the delivery of person-centred, place-based integrated support. Fair Start Scotland contracts end in March 2023, offering significant opportunity for further investment through 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, with an initial focus on parents from the six priority family groups at risk of child poverty.
• Systemically address Scotland's labour market inactivity challenges. Assess trends within different labour market inactive groups and understand what steps can be taken to bring more individuals into the labour market – including through the use of childcare and transport provision, part-time/flexible working, support for employees with disabilities, and business start-up and work from home opportunities. This is inextricably linked to reducing child poverty, including the approach of pathfinders to test how to ensure holistic support enables parents to enter, sustain and progress in work.

Scotland has the opportunity over the next ten years to build a successful economic model that ensures equity of access to the labour market and that work pays for everyone through better wages and fair work. In this way, and in tandem with other government interventions, like the Scottish Child Payment, economic opportunities can significantly reduce levels of child poverty and in-work poverty, particularly for women, and eradicate low pay. We can improve life chances, achieve equality of opportunity for all to access and progress in work whilst at the same time mitigating the risk to employment through a just transition to net zero.

Working across the public, private and third sector, we have the opportunity to design and deliver employability services tailored for local areas and the people that live within them, using place-based and person-centred design, building on our No One Left Behind approach.

The Scottish Government published the 'Best Start, Bright Futures: Tackling Child Poverty Delivery Plan 2022-26' on 24 March 2022 to ensure that work offers an effective and sustainable route out of poverty for families across Scotland. This will build on progress achieved in the first Tackling Child Poverty Delivery Plan.

The Plan identifies that by 2030 the following targets must be met:

• Fewer than 10% of children living in families in relative poverties;
• Fewer than 5% of children living in families in absolute poverty;
• Fewer than 5% of children living in families living in combined low income and material deprivation; and
• Fewer than 5% of children living in families in persistent poverty.

In developing this plan the Scottish Government is mindful of the three needs of the Public Sector Equality Duty (PSED) - eliminate unlawful discrimination, harassment and victimisation, advance equality of opportunity between people who share a protected characteristic and those who do not, and foster good relations between people who share a protected characteristic and those who do not. Where any negative impacts have been identified, we have sought to mitigate/eliminate these. We are also mindful that the equality duty is not just about negating or mitigating negative impacts, as we also have a positive duty to promote equality.

The Plan builds on our Scottish approach to service design and delivery to transform employment support in Scotland and help deliver a system that is more flexible, aligned with other key services, and responsive to the needs of people of all ages who want help and support on their journey towards and into work.

A fully-functioning childcare sector is a pivotal part of Scotland's national economic infrastructure, and will be vital to enabling parents and carers to return to work, or increase their working hours. We have committed to building a system of wraparound school age childcare, offering care before and after school and in the holidays, which will be free to families on the lowest incomes – as well as expanding the provision of funded early learning to all one and two-year-olds, starting in the course of this Parliament with children from low-income households.

The evidence shows that while Scotland (along with Northern Ireland) has the lowest child poverty rate in the UK at 24% (compared to England 30%, Wales 31%), to meet our statutory 2030 target to have less than 10% of children living in relative poverty, around 140,000 children will have to be lifted out of poverty. 15.2% of employees still earn less than the real Living Wage, although this number has reduced by around a quarter in recent years.

Our ability to directly effect change in the labour market is limited if employment law remains reserved to Westminster. Nevertheless, we have used the powers that we do have to ensure that the economy is fair and inclusive and that people of all ages have the skills and capabilities they need to access good jobs. We have done this through our policies on Fair Work Nation, our No One Left Behind approach with Local Government and wider delivery partners in the third sector and our action plans to tackle the gender and disability pay gaps.

Through Fair Work First we are applying Fair Work criteria to public sector contracts and grants to ensure that government funding serves to tackle in-work poverty and low wages by raising the incomes of the lowest paid and improving terms and conditions for all.

The findings from the Business Purpose Commission Report in Spring 2022, informed how businesses can deliver positive impacts on prosperity, wellbeing – including tackling child poverty – and environmental sustainability. It recognised that businesses which take a long term (inter-generational) view of their stakeholder commitments fare better in times of crisis, including during the pandemic. It promotes the stakeholder capitalism model with business leaders, encouraging businesses to see employees, communities and citizens as stakeholders as well as consumers and where businesses are rooted in their communities.

We believe that a progressive approach to industrial relations and to trade unionism is at the very heart of a fairer, more successful society. Trade unions are key social partners in delivering our economic and social aspirations. Accordingly, we recognise the importance of unions and collective bargaining in raising worker wellbeing and promoting progressive and fair workplace practices. The best Fair Work outcomes will be achieved where employers, workers, unions, government, agencies and third sector work together and take ownership for delivery of Fair Work collectively. In some key sectors this will involve enhancing the capacity to take collective decisions through forums involving employers, workers, unions and other partners negotiating minimum standards on pay, conditions and other aspects of Fair Work infrastructure.

All NSET Programmes are interconnected, while our initiatives on promoting entrepreneurial culture in under-represented groups, community wealth building, and skills investment for working age people in poverty will contribute to a fairer and more equal society, this programme focuses on the opportunities from Fair Work and tackling structural barriers to participation in the labour market.

Who will it affect?

Transforming the economy is a national endeavour and government, public sector, business, trade unions, third sector, local authorities and social enterprises all have a part to play.

The economy impacts everybody, regardless of their age, race, sex and other characteristics. However, we know that people with some protected characteristics can be disproportionately affected e.g. women, disabled people and minority ethnic people. We also recognise that these protected characteristics intersect, therefore we have considered them on an intersectional basis. The actions identified in NSET are intended to drive Scotland's overall economic prosperity to the benefit of all our people, including those who face barriers to labour market participation. However, just as every person is an individual with characteristics and circumstances, their experiences of economic activity and the impact that Scotland's economy has on their lives are different. Targeting the actions proposed in NSET towards people with protected characteristics and taking a person-centred approach to considering the outcomes of policies and actions, can help to address entrenched inequalities and cumulative impacts on people, and particularly those who experience disadvantage.

Projects under Programme 5 will have an impact on the following who access services directly and those who are affected by our policies:

• Disabled people;
• Long term unemployed people;
• Young care experienced people (aged 16 – 24);
• Low-income parents across all priority families;
• Young (aged 16 – 24) people who are accessing Education Maintenance Allowance (EMA);
• Women over 50;
• Minority Ethnic Communities; and
• Individuals facing additional barriers which prevent transition towards and into work without intensive support and investment.

Projects under Programme 5 will also have an impact on those who plan, provide, deliver, or fund services:

• Local Authorities, Community Planning Partnerships and Local Employability Partnerships;
• Other Public Sector Bodies, including health services;
• The Third Sector;
• Employment related services, including the Employment Related Services Association (ERSA);
• Employers;
• Trade Unions;
• Training organisations; and
• Further and Higher Education institutions

What might prevent the desired outcomes being achieved?

If Scotland's economy goes into recession, in addition to the cost-of-living crisis, it is possible that some employers will be unable or unwilling to fully engage with the policies. The medium-term economic climate is difficult to predict due to shocks such as the invasion of Ukraine, and it is possible that further economic shocks could negatively impact the labour market.

If the Scottish Government vision for radical transformation is not matched or prioritised by key, strategic partners then the desired outcomes may be difficult to reach. The interventions on structural barriers influencing labour market participation such as poverty and tackling inequalities (including for women and in relation to health, race, disability and other protected characteristics) may not deliver intended outcomes. If we are unable to sufficiently engage with COSLA, SOLACE and Local Authorities in their role as key delivery partners and with private sector employers, recognising the scale and complexity of asks across the range of policies then there may be significant impacts on delivery key aims, outcomes and objectives.

Careful monitoring and tracking of outcomes will be needed to measure success, but this is often difficult. For example, tracking the economically inactive population journey is challenging and makes attributing success of the policies difficult to measure. Gaps in knowledge and awareness, some of which are highlighted in section 12 of this document, related to supporting underrepresented groups across the protected characteristics, is a potential wider barrier to achieving the desired outcomes of the policies. Moreover, these risks and Government's ability to tailor its response accordingly are exacerbated by the lag in systemic issues becoming apparent in labour market statistics.