Technological change and the Scottish labour market

Section 5: Areas for further consideration

Scotland, like all advanced nations, may be standing on the cusp of an unprecedented transition: from a high emission to a low carbon economy; towards a society where fewer workers support an ageing population and, as discussed here, a phase of technological change which, unlike previous waves, may over time tend to reduce demand for labour.

The trajectory of this technological change is not yet clear and its likely impact on the range and quality of jobs is currently subject of fierce debate. It is therefore sensible to prepare to manage this change, in a way that is consistent with shared Scottish Government and STUC priorities of inclusive growth, Fair Work and reducing inequality.

On the basis of both the STUC’s analysis of change at workplace level and a wider consideration of the academic literature, it is possible to identify a number of areas for further consideration and potential action, recognising the critical importance of the role of unions in giving workers an effective voice in determining the action required.

Ongoing knowledge exchange and examining how other countries cope with technological change: The Scottish Government is committed to working with social partners to assess how economic development is being affected by technology. It is important that the latest assessment of sectoral and geographical opportunities and challenges is informed by and shared with trade unions and other civic organisations and that future analysis and dialogue on how technology is shaping the labour market is maintained.

Recent evidence suggests that Germany is handling the shift to higher robot intensity with little impact on aggregate employment ^[35] . The system of collective bargaining and codetermination provides the basis for an approach based on retraining and redeployment. Detailed analysis will be undertaken of how other countries are coping with these changes to inform future strategies in Scotland.

The Scottish Government and the STUC will work together to assess how the process of technological change is being approached in other countries, with a particular focus on the role that fair work principles, workplace democracy and unions play in supporting positive change.

Fair Work and maximising high quality employment opportunities: Whether or not the net impact on overall employment is ultimately positive or negative, there is no doubt that jobs will be created in the researching, developing, producing and deploying of new goods and services. Scotland is already creating high quality jobs in advanced technology sectors where it possesses a genuine competitive edge such as sensors and data analytics.

Building on these advantages to create and sustain significant numbers of jobs in emerging sectors will require, an excellent education and skills systems including in-work training, high levels of digital and other infrastructure, and a supportive business environment including access to patient capital. It also requires an immigration system suited to Scotland’s needs post Brexit, which allows talent and specialist skills around research and development to be accessed. As discussed earlier, much of this policy framework is already in place and is being supplemented by the range of measures announced in the Programme for Government.

The Scottish Government and the STUC agree that automation and digitisation have the potential to improve quality of work if deployed well. It is essential to encourage high levels of health and safety, greater wellbeing and greater prosperity for those in work, while maintaining access to everyday and essential services.

The STUC and Scottish Government agree that automation and digitisation cannot become an opportunity to repackage poor employment practice as innovation. Unions will continue to challenge poor employment practice across the economy and develop new organising strategies that take account of the changing nature of work. The Scottish Government and the STUC will continue to vigorously promote fair work and aim to ensure that all employers place fair work at the heart of their business model. Promoting high quality employment opportunities continues to be a priority for Government, its agencies and the new Strategic Board.

In line with recommendations from the Expert Panel on the Collaborative Economy, the Scottish Government and the STUC will seek to both promote fair work in the collaborative economy and ensure participants are aware of the Fair Work Framework. The Scottish Government will also as far as possible within its powers also seek to ensure that participants in the collaborative economy comply with all relevant regulation when operating in Scotland.

Focus on skills: While the evidence does not support the view that automation and digitisation will lead to the catastrophic net loss of jobs predicted by some researchers, it is likely that some occupations and sectors will experience significant change. It is also possible that these losses could exacerbate regional imbalances.

Workers may see their job change, or disappear, and it is likely that some level of re-skilling may be required throughout their lifetime. It is imperative that workers are treated fairly if faced with these changes and must be supported to change roles with their current employer or supported to find new work with another employer, or in another sector of the economy. Career development is important and routes through the labour market from low skilled, to medium skilled to high skilled roles are necessary to provide a level of social mobility. If these routes are diminished, serious focus will be required to offer lifelong learning and support for workers to allow them to participate in the labour market and to make the most of their skills and potential.

Lessons may be learned from previous and on-going initiatives aimed at managing change in the interests of workers and communities e.g. The Transitional Training Fund established to help oil and gas workers retrain.

It is inevitable that technological and demographic change will combine to place renewed emphasis on in-work training; workers are likely to have to adapt and develop new skills throughout their careers. Workers must be supported to use new technologies, without this support outcomes for individuals will be poor and the positive impacts these changes can have on national productivity will be reduced. Employers will have to play a greater role in delivering this agenda. Scottish Union Learning, which provides demand led training for workers across Scotland, will continue to play an important role. Automation and digitisation should not lock people out of the job market, reduce career progression or limit the ability for workers to raise their living standards throughout their working life.

The Scottish Government’s Programme for Government recognises that investment in digital skills is a priority. The Scottish Government and the STUC will work together to expand the support available to workers in improving their digital skills in addition to the wider support for learning delivered by Scottish Union Learning.

Inequality: There is a broad consensus that the distributional consequences of technological change could be significant. Much of the research literature indicates that there is likely to be a reduction in the number of low and medium skilled roles ^[36] . This trend, if realised, is likely to exacerbate the hollowing out of the labour market that has already occurred. It will be important to consider how employability services prepare for these changes, ensuring that people further from the labour market (and often living in more deprived areas) can secure sustainable work.

The Scottish Government and the STUC are committed to inclusive growth. Technology has the potential to improve access to work and to level the playing field, but it must be deployed in such a way as to tackle inequality. Some of the roles most vulnerable to automation are held predominantly by women or workers from minority ethnic groups, it is therefore important that workers are supported to ensure that automation and digitisation does not exacerbate the inequalities that already exist in society.

Positive wider social benefits could and should be unlocked by the use of new technologies and new ways of working. This will require an ongoing assessment of how regulation and taxation might enable effective redistribution from the use of technology. New mechanisms such as incentives and support for worker ownership will help spread the wealth created through the deployment of new technologies.

Collective bargaining: Through the Fair Work agenda, the Scottish Government and the STUC will support unions and encourage employers to include technological change within collective bargaining agreements, so that workers can shape how technology is used and introduced in their own workplace. The Government and the STUC will also encourage new entrants into the market to engage with fair work principles, encouraging access for unions and effective voice for workers. Automation should be demand not supply driven; should be fully informed by the views of workers; should be job enhancing, and should support high quality and safe workplaces in line with Fair Work objectives.

Influencing development of the UK labour market: The Scottish Government and STUC share serious concerns over the UK Government’s approach to labour market issues. We note again that the origins of current labour market trends originated at least as much in the UK’s distinctive approach to labour market policy and institutions as they do to technological change. This approach undermines shared objectives around inclusive growth, Fair Work and reducing inequality. Therefore, the Scottish Government and STUC will continue to campaign for the case for the devolution of employment law.

Creative Solutions: In the longer term both the STUC and the Scottish Government will consider the need to pursue creative responses to the challenges posed by automation, including investing more in workplace innovation to build capacity around job design and work organisation; and investigating the potential need to reduce working hours but maintain or increase pay levels.

The Scottish Government and the STUC share a common objective – to ensure automation and digitisation are life enhancing for all of Scotland’s people.

Scottish Government and STUC
April 2018