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September 15, 2016

Scotland’s Labour Market Strategy

Scotland’s Labour Market Strategy

Scotland’s Labour Market Strategy was published in August 2016 by the Scottish Government. Its aim is a vibrant, fair and inclusive labour market. The strategy argues that countries with more equal societies typically enjoy stronger, more sustainable, growth over the long run.

The focus of the strategy is on creating more jobs, better quality jobs, and jobs that work for every individual in terms of skills, pay, security, and prospects.

Scotland’s Labour Market Strategy is closely connected to the Scottish Business Pledge and the Fair Work Convention.

This article is a synopsis of Scotland’s Labour Market Strategy.
The Vision of Scotland’s Labour Market Strategy

“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.”

The strategy identifies five priority areas to deliver the vision:
1. promoting the Fair Work Framework and encouraging responsible business;
2. supporting employability and skills, so that all of our people can participate successfully in the labour market;
3. investing in our people and our infrastructure;
4. fostering innovation including workplace innovation which will help spur job creation; and
5. promoting Scotland internationally to improve the competitiveness of our businesses.
Challenges in Scotland’s Labour Market

Scotland’s Labour Market Strategy notes that some similar-sized countries have achieved better outcomes in terms of growth, wellbeing and sustainability than Scotland. It outlines five key challenges in Scotland’s Labour Market:
• The quality of employment opportunities
• The hollowing out of middle income jobs
• The need to improve productivity
• Inequalities between regions and groups
• The shift away from manufacturing to lower paid jobs

In relation to the result of the EU Referendum, the Scottish Government state that it “will take all steps to protect businesses’ ability to access the skills they need, and to safeguard the hard-won rights of workers”.
Actions to Deliver Scotland’s Labour Market Strategy

Scotland’s Labour Market Strategy announces that the Scottish Government will work with the Fair Work Convention to “develop products and services that will support organisations to adapt their workplaces and realise our shared vision”.

The document contains a plethora of activities and actions to deliver its vision. These include (but are not limited to):
• Sectoral and Regional Skills Investment Plans from Skills Development Scotland;
• Supporting the Fair Work Convention to champion the adoption of the fairer working practices; and support organisations to embrace the Fair Work Framework;
• Developing a Workplace Equality Fund to improve outcomes for many equality groups;
• Establishing a Returner’s Project to support those returning to work after a career break;
• Working with the Fair Work Convention to look at broad issues around pay, including real wages, pay ratios, and gain-sharing approaches;
• Assessing the real economic impact of paying the Living Wage for employers and employees;
• Continuing to tackle inequalities around pay gaps and occupational segregation in the labour market for women and for other under-represented groups;
• Encouraging public bodies to promote fair working practices for those who work on public contracts;
• Continuing to support companies who sign up to the Scottish Business Pledge;
• Developing and improving employability services across Scotland
• Closing the attainment gap in education and skills and increasing investment in further and higher education;
• Improving vocational education and expanding Modern Apprenticeships;
• Developing a distinctively Scottish approach to the use of UK Apprenticeship Levy;
• Significantly increasing the numbers of young people getting industry experience while still at school;
• Encouraging greater levels of work-based learning;
• Developing a Science Technology, Engineering and Maths (STEM) Strategy for young people;
• promoting health, safety and wellbeing in the workplace;
• helping companies improve their productivity and provide employment within their communities through Regional Selective Assistance (RSA);
• Investing in transport links promote innovative and productive workplace practices;
• Helping businesses and employers to access expertise to build their skills capacity through Skills for Growth (from Skills Development Scotland);
• Promoting internationalisation.


Measuring the Performance of Scotland’s Labour Market Strategy

The strategy identifies 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:
1. a skilled, productive and engaged workforce capable of meeting the needs of employers;
2. equality of opportunity to access work and to progress, to ensure everyone is able to maximise their potential;
3. fulfilling, secure and well-paid jobs, where employees’ contributions are encouraged, respected and valued;
4. low unemployment and high employment; and
5. an economy that supports a sustainable working population and that can retain and attract new talent, to meet our wider economic and social ambitions.

The strategy notes that some measures and indicators of performance are still to be developed. Existing measures include productivity; participation (employment levels); population growth; cohesion (the gap between regions); solidarity (the relative income of poorer groups); and sustainability (greenhouse gas reduction).


Implementation of Scotland’s Labour Market Strategy

To guide and oversee delivery of Scotland’s Labour Market Strategy, the Scottish Government will establish a Strategic Labour Market Group. This group, will work alongside the independent Fair Work Convention (with a refreshed remit).


The Impact of Scotland’s Labour Market Strategy on Employers

While plans and policies to implement Scotland’s Labour Market Strategy have not been published yet, it seems clear that the Scottish Government will want to focus the efforts of its business support agencies (including Scottish Enterprise, Highlands and Islands Enterprise, and Skills Development Scotland) on the areas identified in the strategy.
This would suggest that the focal points for business support and funding will become:
• Internationalisation
• Innovation
• Skills Development, including vocational training and Modern Apprenticeships
• Key sectors
• Fair Working practices

How this will differ from current business support remains to be seen, but it may be the Scottish Business Pledge and the Fair Work Framework become crucial for employers seeking to secure government support or contracts.
The Fair Work Convention

Set up by the Scottish Government, the remit of the Fair Work Convention was to drive forward the Fair Work agenda by producing a Fair Work Framework by the end of March 2016.

The Fair Work Framework has now been published and the remit of the Fair Work Convention is being revised by the Scottish Government in order to firmly embed “Fair Work” in the Scottish economy.

The vision of the Fair Work Convention is that “by 2025, people in Scotland will have a world-leading working life where fair work drives success, wellbeing and prosperity for individuals, businesses, organisations and society”.

The Fair Work Framework holds that “fair work is work that offers effective voice, opportunity, security, fulfilment and respect; that balances the rights and responsibilities of employers and workers; and that can generate benefits for individuals, organisations and society”.

The Fair Work Convention has three roles.
1. To identify what levers and support can help in moving from aspiration to outcome
2. To bring together employers, workers, unions and others involved in work and to support them in new forms of dialogue that can help Scotland progress towards fairer work.
3. To track progress, at national level, for sectors and for specific groups of workers.


Achieving a Fair Work Landscape in Scotland

The Fair Work Framework is clear that “Fair Work must be located in the workplace and delivered by employers and workers and, where present, union representatives”. The important thing, therefore, is to drive acceptance of the Fair Work Framework by employers and support them to implement it.

The Scottish and UK Governments also have levers they can use to encourage Fair Work. These include legislation and regulation; conditions attached to government contracts; and information and support.

It is not yet clear how the Scottish Government will structure its approach to developing a Fair Work economy.
The Scottish Business Pledge

Connected to Scotland’s Labour Market Strategy and the work of the Fair Work Convention is the Scottish Business Pledge.

The Scottish Business Pledge is a voluntary code of business practice, promoted by the Scottish Government, under which employers commit, over time, to meet nine commitments:
1. Paying the living wage
2. Not using exploitative zero hours contracts
3. Supporting progressive workforce engagement
4. Investing in Youth
5. Making progress on diversity and gender balance
6. Committing to an innovation programme
7. Pursuing international business opportunities
8. Playing an active role in the community
9. Committing to prompt payment

The Scottish Business Pledge shares, with Scotland’s Labour Market Strategy and the Fair Work Framework, the “ambition of boosting productivity, competitiveness, sustainable employment, and workforce engagement and development”. Actively working towards the nine commitments certainly supports the ambition of a Fair Work economy for Scotland.

To sign up to the Scottish Business Pledge, an employer must meet the first commitment (paying the living wage), and any two other commitments. They agree to work towards the other commitments over time.
The pledge is voluntary and, currently, is not a requirement for winning Scottish Government contracts or receiving other support.
Adherence to the Scottish Business Pledge does not, currently, appear to be audited or assessed in any way. However, organisations signing up to the pledge can expect to be “outed” by the court of public opinion if they consistently flout any of its commitments.
Support to make progress towards the nine commitments is provided by Scottish Enterprise, Highlands and Islands Enterprise and Skills Development Scotland.


Further Information:

Scotland’s Labour Market Strategy –

Scottish Business Pledge –

Fair Work Convention –