Scottish Employer Perspectives Survey 2019: research report

Executive Summary 

Introduction

This report presents results from the first edition of the Employer Perspectives Survey (EPS) in Scotland. This survey follows on from a longstanding UK-wide EPS series, which included Scotland, conducted every other year from 2010 to 2016. The survey investigates employers’ approaches to recruitment and training, providing robust and reliable labour market information on how employers engage with the skills system in Scotland. Specifically, this report covers:

• How employers recruit new staff; 
• Their perceptions of new recruits (including young people and education leavers); 
• Their engagement with training providers; and 
• Their offering of work placements and apprenticeships.

The 2019 Scottish EPS was conducted during a time of economic growth and relative stability for Scotland; it had just experienced its ninth consecutive quarter of growth, and unemployment rates were lower than during the previous EPS in 2016. However the survey was also carried out in the midst of Brexit uncertainty, which may impact recruitment patterns and investment decisions in sectors most exposed to the potential impacts of leaving the EU.

Tackling inequality and growing the economy sustainably are key aims for the Scottish Government. The Labour Market Strategy sets out how the desire to create an inclusive labour market with high employment will be met through measures including support for those furtherest from the labour market and those facing specific barriers. The Developing the Young Workforce (DYW) programme receives particular attention in the Scottish EPS 2019. DYW aims to provide more young people with a labour market-relevant range of work-based learning opportunities, vocational qualifications, and a broader range of post-education employment opportunities – a key way this is pursued is by fostering partnerships between local industry and employers, and education providers.

Over 2,500 employers in Scotland contributed their views to the 2019 Scottish EPS via a telephone interview conducted between February and March 2019. Full methodological details can be found in the introduction section to this report and the accompanying Technical Report.

Employer Characteristics

A brief description of the employer population in Scotland is useful to contextualise the findings described in this report. ONS figures estimate that in March 2018 there were 151,200 establishments in Scotland that had at least 2 people working there (including owners and working proprietors), a similar number to that seen in 2016. Between them these establishments employed over 2.4 million people.

The Scottish employer population is predominately made up of small establishments; nearly three-quarters (73%) have fewer than 10 staff. However these small employers account for just 18% of Scottish workers. Most people in Scotland work for larger employers; the largest employers with 100 or more staff account for 43% of all employees despite making up just 2% of establishments. It is worth noting that there has been a slight increase in the proportion of establishments classified in the smallest 2-4 employee sizeband; this group tend to experience skills and human resources issues quite differently from larger employers (e.g. in terms of recruitment and retention).

The largest sectors in the Scottish economy in terms of number of establishments are Business Services and Wholesale and Retail; the smallest are Financial Services and Public Admin (both 2%). There is variance, however, between the sectoral distribution of establishments and the distribution of employment. Health and Social Work is the largest sector by employment, accounting for 16% of employment, and Public Admin accounts for 6% of employment despite comprising just 2% of all establishments. The average size of establishments in both of these sectors is higher than average. 

Regionally, unsurprisingly, some of the highest numbers of establishments and employment were found in the regions encompassing the large cities of Edinburgh, Glasgow and Aberdeen. Highlands and Islands also accounted for a similar proportion of establishments as these regions, but had a smaller proportion of employment. 

The study also captured business growth and outlook. Among employers in operation for more than 12-months, 17% had increased their number of employees in the past 12 months.^[1] In terms of predicted future growth, nearly two-fifths (39%) of all employers in the private sector expected to grow in the next 12 months, compared with 10% who expected to contract (47% expected to remain the same and 4% were unsure). 

The majority (95%) of employers in Scotland are well-established, having been in operation for over 5 years.

Entry to Work

A key focus of the EPS is to collect data to support the Scottish Government’s aims of creating an inclusive labour market with high employment, and assisting those furthest from the labour market and those facing specific barriers. The EPS creates an evidence base for employer recruitment practices, employer attitudes and the prevalence of actions and procedures that will ultimately contribute to achieving these aims.

Around half (48%) of employers had been active in the labour market, having had at least one vacancy in the 12 months preceding the EPS, similar to levels in 2016 (49%), and 43% had recruited any staff. This latter figure was slightly lower than in 2016, when 46% of employers had recruited at least one person in the preceding 12 months. Larger employers were unsurprisingly more active in the recruitment market; nearly all employers with 100 or more staff had had a vacancy (98%) and a similar number (96%) had filled a vacancy, compared to just 23% and 19% respectively of employers with 2-4 staff. 

The more widely employers search for applicants, the more likely they are to increase the number, quality and diversity of applicants and find appropriately skilled workers. Most employers who had recruited in the 12 months prior to the survey had used multiple recruitment methods, only 20% had used a single channel to access candidates. 

Word of mouth or personal recommendation was the most commonly used approach by employers with a vacancy (78%), and other internal resources such as their own social media (56%) or website (53%) were also commonly used. A third (33%) of employers that had had vacancies had used only internal resources and 12% had used only word of mouth to advertise vacancies, which not only limits the range of applicants they receive but also excludes potential candidates who do not have the contacts or connections to find out about these vacancies. This is likely to disproportionately impact the people furthest from the labour market (such as the long term unemployed), a key group that the Scottish Government aims to support.

Relevant work experience remains the attribute most commonly sought by employers in candidates for job roles, with 62% rating it ‘significant’ or ‘critical’. Around half look for basic competence in Maths and English via qualifications to at least National 5 or 6 (equivalent to general or credit standard grade). Relevant vocational qualifications are sought by 46% but relevant academic qualifications are less likely to be important with just 35% rating them ‘critical’ or ‘significant’ when seeking suitable candidates. 

Good recruitment practices in terms of equality and diversity are not mandatory for most employers and supporting and encouraging employers to use them could help the Scottish Government achieve its aim of improving inclusivity in the labour market and reducing inequality. Half of employers who had had a vacancy in the 12-month preceding the study collected information to monitor the diversity of applicants, rising to 77% of employers with 100 or more employees. The practice was more common in the public sector (81%) where Public Sector Equality Duty (PSED) rules require the collection of such information.

Actions to diversify their workforce through good recruitment practices when reviewing applications were relatively rare. Whilst almost half (47%) of employers who had had a vacancy had advertised a role that would be suited to flexible working, just one in eight with a vacancy (13%) had used “positive action”, where a candidate with a specific protected characteristic is chosen over other equally qualified candidates because that characteristic is under-represented in the workplace. Also, just one in twelve (8%) had used “blind” or “no name recruitment”, where irrelevant information such as names are left off CVs to avoid unconscious bias. Again, awareness and use of these practices was higher among larger employers and in the public sector.

The majority of employers who had had a vacancy (82%) could not identify any specific action they had taken to attract and encourage a diverse range of applicants. This was true even among those who monitor the diversity of applicants and use good practice recruitment methods to increase the diversity of their workforce. It appears employers are more likely to be focussed on their selection procedures than considering the ways in which they might reach a wider pool of candidates to start with. Good practice during subsequent steps in the recruitment process might be more effective if greater consideration was also given to earlier stages.

Three-quarters of employers (74%) were aware of the new gender pay gap legislation which came into force in 2018 and requires employers with 250 or more employees to publish their gender pay gap. This awareness increases to 95% of employers large enough to be required to report. Despite this, only a minority of employers who were aware of this legislation had changed their recruitment practices as a result. Amongst those with 250 or more staff (i.e. those who would be required to publish their gender pay gap data) 58% had made no specific changes. A small minority of employers with 250 or more staff who were aware of the requirement had made each of the following changes: increased the transparency of their salaries or salary bands; altered the language used in job adverts; made changes to personnel on recruitment panels; and recruited more women. 

As well as looking at how employers recruit and what they look for in applicants, the EPS also measures who employers are recruiting with regards to older workers, young people and education leavers.

Around two in five (42%) employers who had recruited in the year preceding the study had recruited an older person, defined as aged 50 or over. This is an increase from the 31% seen in 2016. Employers who monitor the diversity of their applicants, use positive action, blind recruitment, offer flexible posts and / or encourage a diverse range of applicants are all more likely to have recruited an older person than their counterparts who have not adopted these recruitment practices. These approaches may therefore be helping to improve the diversity of the workforce by opening up opportunities for more older workers.

The EPS shows that employers are more likely to have recruited a young person under the age of 25 than an older person over the age of 50, however, whereas recruitment of older workers has increased recruitment of any young people has decreased (60% of establishments that had recruited in the previous 12 months had done so, down from 64% in 2016). This has occurred against a backdrop of relatively high youth employment levels, suggesting perhaps fewer young people were seeking employment in 2019, as fewer were unemployed, and thus employers had a smaller pool of young candidates applying for roles.

In line with 2016, the majority of employers who employed a young person had used word of mouth or personal recommendation (59%), with a quarter (24%) relying solely on this approach to reach potential candidates. This could be limiting opportunities for young people who are less well-connected or further from the labour market.

DYW sets targets for the proportion of employers recruiting young people directly from education. For 2018 the target was 35%. In the 2-3 years preceding the Scottish EPS 2019, 30% of employers had recruited an employee to their first job after leaving a Scottish school, college or university, similar to the to 32% seen in 2016 (this small difference was not statistically significant). The proportion of establishments recruiting from schools (20%) and colleges (12%) was broadly unchanged from 2016 but the proportion recruiting university leavers has decreased from 14% in 2016 to 11% in 2019. This change warrants further investigation in order to meet the Scottish Government’s key performance indicator from DYW of 35% of employers recruiting young people directly from education.

A key issue for employers, education providers and policy-makers is whether individuals leaving education to join the workplace are deemed to be well-prepared for their job role. Overall, the majority of employers find their education leavers to be well prepared, and this level of preparedness increases with the level of educational attainment. By type of leaver, 58% of employers who had recruited a school leaver, 74% who had recruited a college leaver and 78% who had recruited a university leaver felt they were well prepared. However, employers were less positive about work preparedness than they were in 2016, and the proportion who felt leavers were poorly or very poorly prepared for work rose five percentage points for each type of leaver. This was most commonly a result of a lack of experience of the working world, lack of life experience and lack of maturity, however those who felt school leavers were poorly prepared also described poor attitude, personality or lack of motivation as issues.

Supporting Entry to Work

As above, employers place a high value on work experience when recruiting new staff. Work experience can help challenge barriers to entry to work, but opportunities need to be open to a broad range of individuals to achieve change. The aforementioned DYW programme has been in place since 2014 and runs to 2021, and includes 21 employer-led Regional Groups which work to foster partnerships between local industry and employers, and education. A key aim of this is that employers work with schools and colleges to provide more young people with a labour market-relevant range of work-based learning opportunities, including work placements, mentoring and interview skills training.

Around one in seven employers (14%) were aware of their DYW Regional Group and 3% had engaged with them over the previous 12 months (around a fifth of all who were aware). Larger employers were more likely to be aware of and (among those aware) to have engaged with their Regional Group.

Despite the majority of employers saying relevant work experience was ‘critical’ or ‘significant’ when evaluating candidates in the recruitment process, only 36% of employers had themselves provided any type of work placement in the 12 months prior to the survey. This represents a slight but statistically significant decrease from the 39% seen in 2016. Most commonly, employers had provided placements for students in education (28%), be it school students (20%), college students (12%) or university students (11%). Broader, adult work placements were provided by 12% of employers, most commonly in the form of work trials for potential new recruits (9% of employers) but also placements to give work experience to the unemployed (4%). Internships (paid or unpaid) were provided by 5% of employers - a slight but statistically significant decrease from the 7% who did so in 2016.

Although the proportion of employers offering work placements in Scotland has decreased, those who do so are offering them to more individuals. In total, employers offering work placements each took an average of just over six individuals on to a placement in the 12 months preceding the survey (up from just over 5 in 2016). Almost 333,000 placements were offered to individuals by employers, an increase of 6% from just under 315,000 in 2016.

A third of employers (34%) who provided work experience had gone on to recruit the trainee to a permanent or long term paid role, in most cases directly following their placement. 

Other work experience activities for students, aside from placements, are described in this report as “work inspiration” activities and include hosting site visits for students, talking to them about their careers or conducting activities such as mock interviews to improve their employability. Overall around one in seven employers (15%) had engaged with schools, colleges or universities in the 12 months preceding the survey to conduct such work inspiration activities.

Both work experience and work inspiration activities were more common among larger employers, and among those in the public sector. The variation was considerable, with employers in the Education and Health and Social Work sectors most likely to have offered work experience (77% and 68% respectively) and work inspiration (39% and 27% respectively; 31% of employers in Public Admin also offered such activities). This can be compared to Construction sector employers, among whom just 21% had offered work experience placements and 6% work inspiration activities.

Employers who had engaged with their local DYW Regional Group were more likely to have offered any work experience (84%), or work inspiration activities (72%). 

Employers most commonly stated altruistic reasons for offering work placements (69%), although just under a third (32%) said they benefited from the placements too, most usually by helping their recruitment. The importance of work placements providing a benefit to the company was greater for larger companies than for smaller.

The main barriers cited by those who did not offer work experience opportunities were structural (68%), for example they had no suitable roles (38%) or lacked the time and resources to do so (20%). Lack of awareness was a barrier for 21%, this was particularly true among employers with 5-24 staff suggesting that a renewed policy focus on this group could open up more work experience opportunities.

People Development

The 2018 Enterprise and Skills Board Strategic Plan outlines an increased focus on alignment and co-operation between the skills and enterprise agencies. Related to this, the Scottish EPS 2019 considers how employers are meeting their training requirements, the type of provider they access, their use of vocational qualifications and their involvement in shaping the training they give to staff. 

Around seven in ten employers (70%) had provided training to their staff in the 12 months preceding the survey, a decrease from the 73% seen in 2016. This decrease was concentrated on just the smallest employers (those with 2-4 staff); training levels for those with 5 or more staff had remained consistent with 2016.

More employers offered internal training (60%) than external training (49%), although 39% had provided both to staff. 

Employers who had offered training (henceforth referred to as “training employers”) primarily use private training providers, such as commercial training organisations, suppliers^[2] and regulatory bodies to deliver their external training (65%), compared to 19% who use public providers (i.e. Colleges and Higher Education Institutions (HEIs)). This was consistent with 2016. The difference in use of public training provision by size was more pronounced than the difference in use of private training provision; just 11% of the smallest employers (2-4 staff) had used public provision compared to 54% of those with 100 or more staff.

There were also considerable differences in the likelihood of employers using public training providers by sector. Training employers in the Education (44%), Health and Social Work (31%) and Public Administration (27%) sectors were most likely to use public training providers, and employers from Financial Services (9%) least likely to do so. The figures were again consistent with patterns seen in 2016, and may reflect that these sectors have a greater need for formal (vocational or academic) qualifications.

Looking at specific types of provider, commercial training organisations were by far the most common type of provider used. In terms of public training providers, 15% had used Colleges and 8% HEIs.

Despite a decrease in the proportion of employers offering training to their employees, the proportion of employers that had arranged or funded training designed to lead to a recognised vocational qualification in the last 12 months had increased to just under a third (31%, up from 26% in 2016). This equated to 44% of training employers, also statistically significantly higher than 2016 (36%). 

Training to higher level vocational qualifications (SCQF Level 6 or above) was more common than to lower level qualifications (50% vs. 32%).

Employers who had trained to vocational qualifications had a positive view about the impact on their business. The vast majority believed they lead to better business performance (85%) and can easily be adapted to business needs (84%). There was also a high level of agreement that offering vocational qualifications improves staff retention (80%). However a fifth (19%) disagreed that vocational qualifications cover all the skills needed by the establishment.

Employers who had not arranged or funded training designed to lead to vocational qualifications most commonly cited reasons relating to the supply of qualifications (48%), including that they are too complicated (20%), no relevant qualifications are available (19%) or comments on the bureaucracy, delivery and rigour of such qualifications. The most common single reasons however were that employers did not know enough about what qualifications were available (31%) and that their staff did not want vocational qualifications (28%).

The Scottish EPS 2019 also looked at the efficacy of current information channels regarding skills and training related issues, and employer awareness and use of different sources of support. Overall 29% of employers had experienced an issue that required advice, information or support on skills or training related issues in the 12 months preceding the survey. Of these, three-quarters (76%) had sought or received advice on the issue. Training providers were the most common source of support.

Four specific Scottish Government initiatives were covered by the survey^[3]; in total 19% of employers were aware of any of these and 1% had used any. Awareness and usage were higher among larger employers, with 40% of those with 100 or more staff aware of at least one of the initiatives and 13% had used at least one.

Encouraging employers to work together is one approach to increasing training provision for the workforce, through shared resources to fund courses or through working collaboratively to develop training policies or programmes for the industry or region. Overall, 14% of employers had collaborated with other employers in this way. Such employer collaboration was more common in larger employers and among the public and voluntary sectors. DYW Regional Groups also encourage employers to work together in this way and collaboration was more common among employers who had engaged with their local DYW Regional Group (33%, although the survey cannot tell us whether the DYW Groups are effectively encouraging the collaboration or whether it is simply that the sorts of employers engaging with the DYW Regional Groups tend to be more collaborative anyway).

Similarly encouraging employers to get involved or provide input into the design or content of the training demonstrates employer ownership of the training and helps ensure that the training employers provide to staff meets their needs. Overall 44% of employers who had provided training towards vocational qualifications for staff had had some level of involvement in determining the design or content of the training. This is slightly lower than in 2016 (49%). Among those who were not involved, 18% said they would have liked to have been. The most common reason for not being involved was that they did not know they could or had not been given the opportunity, but some also said they felt it was too much time and effort to do so or that the provider was not open to their involvement.

Apprenticeships

Modern and Graduate Apprenticeships in Scotland allow individuals to work whilst gaining an industry-recognised qualification, and allow employers to develop their workforce through training new staff and upskilling existing employees. There has been a substantial change since the last EPS was conducted in 2016, with the introduction of the UK Government’s Apprenticeship Levy whereby large employers (with an annual pay bill of more than £3 million) pay a levy to HMRC. The UK Government Apprenticeship Levy does not provide a new stream of funding to the Scottish Government and the Scottish share of the Levy receipts largely replaces money previously received. This will continue to be invested in skills, training and employability to meet the needs of employers, the workforce, young people and Scotland’s economy.Scottish Government has a commitment to provide 30,000 new Apprenticeship starts by 2020/21.

Around one in seven employers (16%) were offering apprenticeships at the time of the survey. This breaks down as 11% of employers that employed at least one apprentice at the time of the survey, with a further 5% that were offering apprenticeships but did not have any current apprentices. Apprenticeships were more common in the Education sector (offered by 32% of employers) and Construction (28%).

Overall the proportion offering apprenticeships is unchanged since 2016, however this masks changes within certain sizebands and sectors. Most notably the proportion of employers offering apprenticeships has increased among those in the 10-24 sizeband (from 19% to 25%). There was also an increase in the Business Services sector, and a decrease in Construction.

Employers with current apprentices employed a mean average of between two and three apprentices. Over half (56%) had just one, but 12% had five or more. Compared to when they first started offering apprenticeships, a quarter of employers with current apprentices (25%) reported that the number of apprentices they employ has increased since they started offering them. Only 5% reported that the number of apprentices they employ has decreased.

Around a fifth (22%) of employers offering apprenticeships had started doing so in the last three years; this was most commonly because they view apprenticeships as a good way to get skilled staff (30%) and to help bring young people into the company or industry (28%).

Employers who do not offer apprenticeships most commonly believe them not to be suitable for employers of their size (20%, higher among small employers) or sector (13%). These reasons may point to a lack of awareness or knowledge among some employers as to the breadth of apprenticeship types and frameworks available and the ability to tailor apprenticeships to their needs.

Apprenticeships were most commonly offered to young people under the age of 25: 90% offered them to this age group, 44% exclusively. By contrast 47% offered them to people aged 25 or older, 1% exclusively.

Apprenticeships were offered mainly to new recruits rather than existing staff. Among employers offering apprenticeships, 43% offered them only to new employees recruited specifically as apprentices, 7% offered them only to existing employees and 46% offered them to both. Half (50%) had used some sort of work experience placement to help determine whether an individual was suitable for an apprenticeship prior to recruiting them as an apprentice.

The length of apprenticeships offered is broadly in line with 2016; employers most commonly offered apprenticeships lasting between 3-5 years (44%). The proportion of employers offering apprenticeships lasting less than 12 months has however decreased from 11% (reported in both 2014 and 2016) to 7% in 2019. 

Most employers had used an external training provider to deliver at least some of the training for their apprentices (82%); this was most commonly Colleges (57%), commercial training providers (42%) and professional or regulatory bodies (28%). Whilst use of colleges to deliver training had increased (from 49% in 2016), use of universities and other HEIs had decreased from 12% in 2016 to 8% in 2019.

Three-quarters (76%) of employers with apprenticeship completers felt their apprentices were well prepared for work when they finished their apprenticeship. This is in line with the perceived work preparedness of college (74%) and university (78%) leavers outlined above. However 15% still felt their apprentice completers were poorly prepared. 

Awareness of apprenticeships among employers not offering them was high: 77% were aware and said they had some knowledge of what was involved, 21% had heard of them but did not know much about them and just 2% had not heard of them at all. 

Two new types of apprenticeship have recently been introduced in Scotland: Foundation apprenticeships (FAs) in 2014 and Graduate Apprenticeships (GAs) in 2017. Awareness of these new apprenticeship types was reasonably high: just over half of all employers were aware of GAs and 1% had a current GA at the time of the survey; just over two-fifths (43%) were aware of FAs and 1% had had a secondary school pupil in their senior phase undertake an FA with them.

An estimated 26% of all employers plan to offer apprenticeships in future. The vast majority of those who currently offer apprenticeships plan to continue offering them in future (90%), and among employers who don’t currently offer apprenticeships 14% plan to do so in future. Futhermore, 22% of employers with current apprentices who expected to continue offering apprenticeships said they expected to increase the numbers they employ over the next two years; just 5% expected to reduce numbers.