- 20 Mar 2019
Attendees and apologies
- Jamie Hepburn MSP, Minister for Business, Fair Work and Skills (Chair)
- David Watt
- Stephen Boyle
- Professor Ewart Keep
- Michelle Armour
- Hamish Watson
- Peter Hunter
- Jamie Kerr
- Stephen Boyd, EPC : Economic Policy & Capability Division, Scottish Government (SG)
- Rachel Sunderland, ESM : Migration and Free Movement of People, SG
- Henry Acres, ESM : Migration and Free Movement of People, SG
- Dominic Mellan, OCEAES : Employability, Skills & Labour Market Analysis, SG
- Richard Morrison, OCEAES : Employability, Skills & Labour Market Analysis, SG
- Dominic Munro, Fair Work, Employability and Skills, SG
- Colin Robertson, Fair Work, Employability and Skills, SG
- Gordon McGuiness, Skills Development Scotland
- Kathleen Robertson, Fair Work, Employability and Skills, SG
- Martin Reid, Fair Work, Employability and Skills, SG
- Paul Travers, Fair Work, Employability and Skills, SG
- Sam Pirrie, Fair Work, Employability and Skills, SG
- Lynne Cadenhead
- Francis Stuart
- Amanda Jones
- Elma Murray
- Gary Sharp
- Dr Gina Netto
- Lucy O’Caroll
- Grahame Smith
- Hugh McAloon, Fair Work and Skills
- Mark Smith
- Prof Graeme Roy
- Dr Jim McCormick
Items and actions
Agenda item 1: Welcome and introduction
The Minister welcomed everyone to the sixth meeting of the Strategic Labour Market Group (SLMG). Apologies were noted and members advised that Elma Murray and Gary Sharp have indicated that they will be stepping down from the group due to retirement and a change in role, respectively.
Agenda item 2: Minutes of the previous meeting
The minutes of the last meeting were agreed with no amendments.
Members were advised that an updated version of the economic summary paper supplied as part of the meeting was available. The Minister invited Dominic Mellan from the Office of the Chief Economic Adviser (OCEA) to give a brief overview of the paper:
- economic growth strengthens: economic growth remains below its pre-recession trend rate. However, quarterly increases in Gross Domestic Product (GDP) have picked up, growing at 0.4% and 0.5% in the first two quarters
- strong headline labour market rates: Scotland’s employment rate (74.9%) remains high by historical standards although there are fewer people in work than last quarter and last year. At 3.9%, Scotland’s unemployment rate is close to record low (3.8%) and lower than UK’s (4.0%). Employment and unemployment levels compare well with pre-recession trends
- employment demographics: For women, Scotland still outperforms the UK on employment (71.2% vs 71.0%) and unemployment rates (3.2% vs 4.0%) but these have fallen back in the past year. For men, labour market outcomes remain poorer in Scotland than the UK. The gender employment gap continues to be smaller in Scotland
- sector employment changes: There was a fairly broad based increase in employment across sectors in 2017. Employment increased in banking, insurance & finance, construction, manufacturing, agriculture, forestry & fishing and energy & water. There was a fall in other services employment – including arts, entertainment and recreation
- long term labour market trends: A “hollowing out” of our labour market continues, with employment growth concentrated in high skill jobs with medium-low skilled jobs declining. Our workforce is also ageing. Ten years ago, 50-64 year olds made up around 25% of our workforce, they now account for over 30%
Members raised the following points:
- have women fallen back?
Yes, no reason has been identified for the change but the rise on inactivity could be the explanation
- gender pay gap has narrowed
- the hollowing out point, it’s worth noting that this is a different hollowing out compared to that what happened previously. There has been an increase in high skill jobs
Agenda item 3: General update
The Minister invited Martin Reid to give an exceptions based report on the Work Plan. He advised members that all action points are either complete or in progress.
Members were reminded that we still intend to publish past papers from the group online. This will now be made a priority in advance of the next meeting.
Secretariat is still hoping to increase engagement between meetings, noting that there had been some engagement on gender issues. Suggestion that certain areas of work taken forward by the Scottish Government (SG) may benefit from the input of SLMG. Members were encouraged to raise issues or areas of particular interest, suggesting that this engagement could work two ways.
Secretariat will explore methods to facilitate collaboration.
Ongoing action points from previous minutes:
- Secretariat to liaise with secretariat of the Women and Work Group about setting up Huddle
- Secretariat to facilitate informal discussion on changing the focus around immigration
- Secretariat to explore options for publishing papers online
- Secretariat to share past minutes with the Group and members to check their presentation before publication
- Secretariat to update on the Older People in Employment Action Plan and share with the group when available
- Secretariat to circulate the Labour Market Measurement Framework before the next meeting and as soon as possible to prior support engagement
- Secretariat to provide Minister with copy of “Free Radicals” report
- SG to consider how/if to more strongly promote the value of FE with a view to shifting employer attitudes toward degree level qualifications
- consider support for Digital Nomads to encourage young entrepreneurs
- consider the need to support sales training a core skill for all workers (in school/colleges/universities)
- look into what can be done to promote skills for becoming self-employed
- review research (or need for research) into what is being done to understand what young people want to do in terms of work and how they want to operate
- consider if there is anything that can be done around Year of the Young Person (perhaps to support previous point)
- consider the accessibility of FE/HE for older workers (view was that many universities in particular were closing or reducing this provision)
- SG to review discussion with Skilled and Productive Workforce Unit
Agenda item 4: Migration Advisory Committee (MAC) report
The Minister introduced the first main agenda item and invited Henry Acres to give an overview of the paper. The group were asked to consider the following key discussion points:
- it would be helpful to discuss the potential impact of the MAC’s recommendations. What impact will the proposed changes to the immigration rules have
- are there specific issues which were not considered by the MAC which are particularly relevant
- what recommendations would you have wanted to see in the MAC report
In discussion, the Group raised the following points:
- first indication is that the report was not as bad as it could have been. Preferential (EU) recruitment has always been an issue for businesses. This would eliminate the EU recruitment step and open up recruitment from anywhere. Tech sectors in particular would benefit and also health
- many sectors, however, would find the suggested new arrangements challenging
- in the long term there could be a silver lining. There is an assumption that the labour market will suffer supply issues and this may discourage the sometimes “easy come easy go” employer relationship with staff, encouraging investment in people by employer and vice versa
- low wage issue could be addressed by limited labour supply. UK food manufacturing is often low paid work however in some European countries this isn’t the case. In France and Denmark food manufacturing is not low paid. Look at what’s happening in these countries and try to replicate
- the Scottish economy would have to substitute cash for labour to see a long term benefit, for example with automation
- should look to reduce low wage low input employment. Singapore is a good example of this. Smaller workforce becoming more efficient
- Scotland – food industry is a long way away from its market which pushes up costs – these issues will remain on top of increased staff costs thereby making Scottish products more expensive
- unlikely to see migration from third countries to Scotland. Climate and cultural barriers are wider here than in the south of the UK
- clear lack of understanding of the Scottish economy by the MAC. How can you grow an economy with a declining population?
- students are massively important. The £30k wage requirement is likely to mean no students studying will be able to stay post study
- more needs to be done across the board (employers/government) to make Scotland attractive
- assuming migration does fall significantly, there are other options to potentially fill that gap or at least reduce the impact. There are 170k people currently inactive in Scotland that have indicated they would like to work. The turnover of this category tends to be a lot slower than the unemployed. Opportunity to fix the labour supply in Scotland and help the inactive to become active
- a number of these may fall within the plan to half the disability employment gap. Could the figures be explored further to enable further work to be done in this area?
- employers are already struggling, why hasn’t this happened already? Employers don’t have the HR capabilities to do anything different than what they are doing/have ever done. A project that delivered free HR help was designed to help businesses grow and expand, but ended up using its full resource just making businesses legally compliant
- rurality: firms find it easier to have migrants relocate than locals as they have no roots/ties to certain areas
- all EU employers would become liable for the immigration charge. It’s a lot of money for smaller businesses
- Convention of the Highlands and Islands – public sector, health boards etc lack of housing for them and their families. Fort William is a good example of all sectors coming together to deliver and build social housing with infrastructure
- seasonal agricultural scheme – farmers might like that but potential for exploitation. Better regulation required for that end of the labour market
- we need to decide what we want from immigration. Is population growth the top priority? Should there be a more coherent overarching population growth policy?
- are there any methods to speak to migrants and use the positive experiences to help promote Scotland as a place to be? Strong message from First Minister about the value of EU and third country nationals in Scotland. We Are Scotland champions?
- develop and fund resource for EU in Scotland to provide info on Brexit
- third sector could be best placed to speak to existing migrant workforce to help gather information
- further piece of work should be done to shift language from Immigration to Work permits. 300,000 businesses in Scotland and very few of them will have the skills and capacity to do anything with immigration/work permits
- Scottish approach – should focus on workers’ rights. “You will be looked after”; “We will be tough on exploitation”. Make fair work agenda a real experience. Some devolved powers would help shape a response
- remember that migration can be from within the UK. How do we promote this? “South of UK can very expensive, why don’t you move to Scotland - better value, bring your family”
- Scottish framework for Visas should be possible with Scotland specific tax codes now in use
- need to appreciate timescales for business – lack of detail clarity to allow planning
Action point: Scottish Government to address/share issues raised by Group with relevant policy leads for consideration and input to negotiating position.
Agenda item 5: Rural skills
The Minister introduced this item and invited Gordon McGuinness to give an overview of the paper.
Colin Robertson further noted that the perception was that the skills system was not working well in rural areas in regards to Modern Apprenticeships (MAs). However, statistically there was a level share of MAs in rural v non rural areas based on population.
The minister asked the group to consider the following key discussion points from the paper:
- does the scope of the plan set out above cover the main strategic drivers for rural skills
- how do we benchmark progress of the actions that will be set out in the rural skills action plan
- how we might develop a more co-ordinated approach in terms of attracting and retaining families to rural areas in order to ensure that recruitment and skills activity is aligned with the need to address rural depopulation and grow the rural economy
In discussion, members raised the following points:
- infrastructure and transport issues continue to be a major barrier for rural areas
- are the issues more related to the size and type of businesses
- accentuate capacity for training providers to support it locally – tried supplements
- practical issues for local support such as travel. Good lessons to be learned from the University of the Highlands and Islands on distance and blended learning
- if there are issues around capacity what can we do differently
- the SG sets quite a high bar on applying. Planned shared apprenticeships are difficult
- FE to produce more skilled workforce
- Scottish Power struggle to recruit for certain areas. To tackle this they have implemented early intervention at schools in the areas to promote them as an employer and support students through the pipeline. Large companies have the resources and capacity to do this
- local authority (LA) support crucial. A number of small businesses wouldn’t know where to start. Some gaps identified in support from LAs
- the apprenticeship levy would work if it’s done properly
- rural immigration: skills system should fit Scotland
- shared apprenticeships / pre apprenticeships / foundation apprenticeships are good but farm and seasonal work makes it difficult
- there are good examples around the UK but this is based on Group Training Associations
- large rural employers like Historic Scotland and National Trust could be used as anchor organisations to support this. Can they be incentivised
- previously worked with the Forestry Commission on something similar but tends to be archaic trades in small numbers
- LAs are committed but not legislatively required to support. Could this be made mandatory
- local economic work in LAs has been successful. Western Isles have signed a charter that will ensure that housing and transport etc is all improved. This is ok for smaller LAs but difficult to scale up
- look at Western Isles as an exemplar. Economy is buoyant – what have they done to improve? Biggest barrier is housing social and open market. Capture this work and support other areas
- LAs / Boards / NHS: are employers doing enough on modern apprenticeships? Some are better than others. Lifting the age restriction and funding have helped
- public bodies are focused on: how do we get our money back
Action point: Scottish Government to address/share issues raised by Group with relevant policy leads for consideration.
Agenda item 6: AoB
Members asked if there was scope to bring the results of the gender pay gap to the group as its very relevant. This topic has been added for inclusion at the next meeting.
Labour supply issue identified earlier at the meeting – 170k inactive people. If this could be drilled into further and a paper brought to the next meeting for consideration, it would be an ideal second topic.
It was agreed that Automation was a lower priority to the two topics above and would be pushed to the second meeting in 2019 which would almost certainly contain an item around Brexit / post Brexit issues.
Meetings to be planned further in advance – dates to be agreed with members for the next two meetings by the end of the year.
EU Exit and Constitution Unit (FWES)
5 Atlantic Quay