Chapter 2: Work and Earnings
"My mum had a job, working all the time, but now she doesn't get as many shifts so we're struggling at the moment."
Member of the Children's Parliament, age 9
Fair work is central to improving the lives of all families in Scotland.  Our vision for a strong Scottish labour market is one that drives inclusive, sustainable economic growth, characterised by thriving, competitive businesses, high employment, and a skilled population capable of meeting the needs of employers.
While employment is still the best route out of poverty, the majority of families in poverty already include someone in work, so to be a long-term solution, a culture of Fair Work needs to be embedded. In short, parents need to be able to access high quality jobs with a decent rate of pay, good training and support, opportunities to progress, a flexible work environment, and enough hours in work to meet basic family needs.
Parents who have to balance work and home responsibilities can find securing these kinds of jobs challenging. Some women, as traditionally the main carers of children, may feel that it's easier to work part-time, in a lower paid job, to balance family needs, topping up the wage of a primary earner. Other women, particularly lone parents, may be juggling several low-paid jobs at the same time to earn enough to cover basic essentials. It needs to be easier for all parents to earn more and work flexibly to make sure they can have rewarding careers with the ability to progress; and of course, the gender pay gap needs to be reduced further too.
For lone parents, young mothers, women returning to work after the birth of a child and parents with three or more children, a range of barriers can prevent them from finding quality jobs and staying in work. Many low income jobs in certain sectors (such as the 5 Cs - Cleaning, Catering, Caring, Cashiering, Clerical) tend to be done by women. By encouraging businesses to raise the value of these roles, and make them more flexible for families, we may be able to have an impact on child poverty. Focusing our efforts on businesses in these sectors, aligning to the Scottish Business Pledge (which, amongst other things, requires the Living Wage to be paid), will help us do this; and if businesses take action, the whole economy benefits.
A quality job that takes disabled parents' needs properly into account can also be difficult to find. A Fairer Scotland for Disabled People  set out our ambition to reduce, by at least half, the employment gap between disabled people and the rest of the working population, along with a range of supporting policies. Many of these policies help disabled people into work, but some also help to sustain employment for people already in work if they become disabled.
We also want to make sure that parents from minority ethnic communities have good access to high quality employment. In our Race Equality Action Plan  , we committed to set targets to check progress and work with stakeholders to ensure employment measures deliver fairly for minority ethnic communities. This included specific actions around raising the number of teachers and police officers, helping minority ethnic entrepreneurs and delivering a capacity building programme for social enterprise.
The structure of rural employment is different from that in the rest of Scotland, with a greater reliance on the private sector and on micro or small businesses. Rural areas have twice as much self-employment, and significantly greater seasonal employment, part-time working, working in multiple jobs and home-based working. This can create a flexible workforce to respond to economic circumstances but also makes it harder to roll out employment and employability schemes. So any actions we take will need to deliver for parents in rural areas too.
The current piecemeal approach to devolution - combined with significant concerns about the impacts of UK Government led welfare reforms, benefit reductions and the complexity and inefficiencies in the interaction between existing devolved and reserved powers - is such that the Scottish Government seeks full devolution of all relevant powers in this agenda. This includes full control over the Jobcentre Plus network in Scotland and relevant powers over employability. We believe that more powers are necessary if we are to deliver a more effective, coherent and complete offer - better supporting transitions into work and those unable to work, helping deliver a more inclusive workforce in Scotland and, crucially, helping us tackle child poverty and broader inequality.
The actions in this part of the Delivery Plan are intended to deliver this Fair Work focus.
New Employment Support For Parents
"There are so many people that do not have money. As we know, money is an everyday necessity, especially for those with children or no job."
Member of the Children's Parliament, age 12
Two major new initiatives will help low income parents with employment:
- Fair Start Scotland, our national devolved employment support service.
- Additional employment support for parents, investing £12 million over the period of the Delivery Plan to deliver key worker support to our priority families.
A new focus on sustainable employment - Fair Start Scotland
Our national devolved employment support service, Fair Start Scotland, goes live in April 2018 and will make a strong contribution to helping us meet our child poverty targets. It is estimated that the service could positively impact around 7,000 children currently in poverty.
The service concentrates on helping people gain sustained employment. It will support at least 38,000 people over three years and focus on helping people with particular challenges in finding work. Key among these are several groups who are able to access immediate and early entry to the service: lone parents, disabled people, minority ethnic groups, refugees and people who live in the 15% most deprived areas of Scotland.  Care-experienced young people are also a priority group for the programme, as they have a higher proportion of adverse childhood experiences than young people not in care and face multiple barriers to employment.
Fair Start Scotland will be important for lifting families out of poverty. Understanding the drivers of inequality and taking action to address them is key to the success of Fair Start Scotland, and the Scottish Government's aim of treating people with dignity, fairness and respect.
Delivery of the new service will be taken forward in partnership with contracted providers, local authorities and third sector organisations, using a flexible and "whole person" tailored approach that identifies the needs and barriers individuals have in finding work, and staying in work.
Fair Start Scotland will offer pre-work support for 12-18 months. Participation will be entirely voluntary, and all participants can expect to receive in-depth action planning to ensure the support they receive suits their individual needs and circumstances. The service will also offer high quality in-work support for 12 months. Those who require specialist support to help them find work can expect to receive it - and this may be particularly beneficial for parents who will have particular requirements. For disabled people who require intensive support, supported employment and individual placement and support will be available. There will be national standards to ensure everyone is supported consistently across the nine geographic contract areas across Scotland.
The Scottish Government has provided a budget of up to £96 million to deliver Fair Start Scotland over the next five years from April 2018.
Potential for impact on all four targets through earnings. The policy has a particular focus on lone parents, disabled people and minority ethnic groups.
Intensive employment support for parents
We will invest £12 million from the Tackling Child Poverty Fund to provide intensive support for low income parents to help them get into work and - for those already in work - to progress through a career.
Fair Start Scotland will provide help in a variety of ways, but we have been considering what more we can do for the priority families identified in this Plan who need support but aren't eligible or ready for this or other programmes. Key children's services organisations consulted in the course of developing the Plan highlighted that some parents would need holistic support to build confidence and develop skills before they would be ready to enter or come back to the workplace, while the Poverty and Inequality Commission said we needed action that recognised the barriers faced by those at greatest risk of family poverty.
Parents in our priority groups - lone parents, larger families, minority ethnic families, families with a disabled adult or child, young mothers and families with a child under one - often need structured and personalised support to help them get back into work or to take the next steps in building the career they want for themselves. The Commission also asked us to focus on supporting in-work progression for families living in poverty, so this is also a key component of our approach.
Working with our partners, we will therefore invest £12 million from the Tackling Child Poverty Fund to provide additional support for these low income parents.
Building on what works, the investment will focus on intensive key worker support that provides:
- Person-centred help for parents to address their barriers to work, which might include health support, money advice, or motivational support.
- Help in meeting the increasing challenge of in-work poverty, targeting support to help parents already in jobs to remain active in the workplace and gain progression through a rewarding career.
It is critical that new funding is delivered as part of a more straightforward, flexible and person-centred employability system in Scotland and aligns with Fair Start Scotland and other programmes at both a national and local level. We will therefore work closely with our partners to develop a package of support that delivers on these objectives and ensures a balance of support between those struggling to get a foothold in the labour market with those in low-paid work.
We will also monitor and evaluate to learn lessons and consider how to develop our support offer in the next Delivery Plan.
£12 million is available over the course of the Delivery Plan from the Tackling Child Poverty Fund. We will look to expand the offer if monitoring suggests strong indications of success.
Potential for impact on all four targets through earnings. This proposal is subject to on-going design and the most appropriate way to target priority groups will be considered.
Tackling Low Pay
Parents consulted in preparation for this Plan said that wages hadn't increased in line with higher costs of living - they saw it as vital that employers paid a Living Wage.
This section sets out two key areas of action on low pay:
- Our focus on the Living Wage.
- Public Sector Pay.
Building a Living Wage Nation
To help tackle low pay, we commit to lifting at least 25,000 more people onto the Living Wage over the next three years. We will take concrete steps to build a new Living Wage Nation. We will take a sectoral approach, focusing on hospitality and tourism.
While some households are in poverty because of low wages, not everyone on low pay is in poverty - for example, where a couple's combined earnings are enough to avoid poverty. So this is not just a poverty-driven policy - it's also about fairness for all, particularly for those more likely to be on low pay - for example, young people, women, disabled people, and those from minority ethnic backgrounds. However, this does not take away from the fact that we know that boosting low pay will help reduce child poverty.
We have already done a lot to promote the Living Wage in Scotland. The Scottish Government has long championed the payment of the Living Wage and the real benefits to our economy of treating people who work more fairly. We have demonstrated our commitment to paying the Living Wage by becoming an Accredited Living Wage Employer, the first government in the UK to do so.
Scotland remains the best performing of all four UK countries with the highest proportion of employees paid the Living Wage or more (81.6%). With over 1,100 Accredited Living Wage Employers, we are now moving to a new level of ambition.
Over the next three years the Scottish Government will work with the Poverty Alliance to build a 'Living Wage Nation', boosting the wages of those on low pay and supporting inclusive growth. To embed and promote the Living Wage, in 2018 we will establish the UK's first Living Wage town, city and region.
Our work with the Poverty Alliance will mean that at least 25,000 more people over the next three years will receive a pay increase due to their employer becoming Living Wage accredited. The number of businesses accredited will grow by at least 10% a year.
There will also be a focus on hospitality and tourism. Although these sectors can offer high wages and quick promotion with early responsibility, there are many low paid jobs too. These sectors are dominated by women workers, the majority of whom work part-time. As a key growth sector, and Scotland's second largest employment sector, tourism and the hospitality industry needs to play its full role in ending child poverty. This sector has a lot to offer - it has a reach that is unlike many others, even into the most rural parts of Scotland. It can also provide a wide range of flexible working opportunities, at all levels of the industry and for those at all stages of their career path.
As we build wider support for Scotland's tourism destinations, we will also support them to make fair work part of their development, using the funding and other levers at our disposal to embed the promotion of fair working practices and to build Living Wage Places. In Dundee, Skills Development Scotland is already working with creative industries business networks to identify opportunities to strengthen entry level opportunities for young people and to stimulate business growth and sustainability.
Our joint strategy focussing on a place-based approach and low pay industries will greatly help the coordinated approach needed across government to ensure that for those who are able to work, paid employment offers the best and most sustainable route out of poverty.
We are currently finalising funding with our partners for this action.
Potential for impact on all four targets through earnings. Women, who are more likely to work in low pay sectors, will benefit most.
Tackling low pay in the public sector
In the face of UK Government's continued budget cuts, we have once again developed a progressive Public Sector Pay Policy which is fair, supports those on lower incomes and protects public sector jobs and services while delivering value for money for the people of Scotland.
The Programme for Government included a commitment to lift the 1% public sector pay cap. We were the first government in the UK to make such a commitment, acknowledging the pressure inflation and benefit cuts are having on household incomes.
The Pay Policy demonstrates a progressive approach to pay and delivers:
- A 3% pay increase for all those earning up to £36,500. This benefits over 75% of staff covered directly by our Pay Policy and has the potential to benefit over 75% of public sector workers in Scotland.
- Up to 2% of baseline salaries for those earning between £36,500 and £80,000.
- A cap of £1,600 for those earning over £80,000 - recognising that senior public sector leaders need to demonstrate pay restraint in their pay settlements.
We have set an important direction of travel by delivering on our promise of pay increases which reflect the cost of living and remain affordable.
The Pay Policy is underpinned by our commitment to the real Living Wage.
The 2018-19 pay policy applies to pay settlements between 1 April 2018 and 31 March 2019.
Many public bodies are currently in early pay discussions with their staff representatives and costs will not be available until after individual pay awards are implemented.
Potential for impact on all four targets through earnings.
Flexible Workforce Development Fund
In December 2016, the Scottish Government announced the introduction of a new £10 million Flexible Workforce Development Fund ( FWDF) to provide employers with workforce development training to up-skill and re-skill their existing workforce. The Fund is in direct response to feedback from the Scottish Government's recent consultation on the introduction of the UK Government Apprenticeship Levy.
Employers (in scope to pay the levy) will have flexibility to train members of their workforce through college provision to bring greatest benefit to their organisation. Within this and in line with Scottish Government priorities, employers are encouraged to give due consideration to specific groups such as older workers; those in low skilled jobs; those working regularly with younger workers/apprentices; veterans/early service leavers; and workers from equality groups.
2016 figures showed that 31% of those in employment have a dependent child aged under 16.  We expect therefore that around a third of those benefitting from FWDF will be parents - although it may be a higher share than that, given the FWDF focus on low pay sectors, which are more likely to be dominated by women. We will monitor and evaluate the Fund to check its impacts on parents.
Our investment will be administered by the Scottish Funding Council and be made available through regional colleges and Scotland's Rural College.
£10 million available for the Fund in academic year 2018-19.
Potential for impact on all four targets through earnings. Employers are being encouraged to give due consideration to specific groups, including many of our priority families.
New Support for Equality at Work
Equality at work is crucial if we are to eradicate child poverty.
Professor Lesley Sawers' report on the Role & Contribution of Women in the Scottish Economy (2015) noted that changes in attitude, culture and workplace practices are needed if we are to unlock the full economic potential of the whole population of Scotland.
The Equality and Human Rights Commission stated in its report Is Scotland Fairer? (2016) that inequalities in access to employment and in the workplace are having negative impacts relating to gender, age, disability and ethnicity. Timewise has argued that a significant number of people, especially women, become trapped in low-paid part-time work, not because of a lack of skills, but because they need flexibility and can't find a quality flexible or part-time job.
We are taking forward a range of new actions to advance equality in the workplace. This includes the following:
1. New action to support the achievement of our commitment to seek to reduce by more than half the disability employment gap.
2. Action to reduce the gender pay gap.
3. A new £750,000 Workplace Equality Fund to help overcome long standing and systemic issues with recruitment practices and progression in the workplace.
4. Action to promote flexible working with employers.
More on these actions now follows.
A new approach to employment, developed with disabled people
In spring 2018, we will set out our next steps to reduce the disability employment gap by more than half. We will set targets to increase the number of disabled people employed in the public sector. Disabled parenthood will be an important element of this. We know that child poverty is more prevalent for those children living in households with a disabled person - with 30% of children in households with someone disabled in poverty compared to 20% of children in households where no-one is disabled.
We are consulting disabled people, their representative bodies, service providers, employers and other stakeholders on the actions necessary to support the achievement of our commitment to seek to reduce by more than half the disability employment gap. We will set out our next steps for action at a major congress in April.
As part of this, we will ensure that employability of disabled parents has a place in our plans. We want to better understand the barriers disabled parents face balancing home and work responsibilities, on top of the other challenges presented by the modern workplace. We will work with them to ensure our approach is sensitively and appropriately developed.
We will also link to other Scottish Government policies which can have an impact on disability employment, including early years and childcare, our skills and fair work policies, health, transport and communities. Fair work is a particularly important factor in all of this - we need to make sure disabled parents get a positive outcome, not that they simply move from unemployment into in-work poverty.
We are developing our final proposals and therefore the budget is still subject to consideration.
Potential for impact on all four targets for disabled parents through earnings if they are more able to take up paid work.
New action on the gender pay gap
Gender pay gaps are symptomatic of structural gender inequalities in the workplace, education and wider society. The issue limits economic growth and has negative consequences for children. If we could reduce the gender pay gap further, and do more to tackle occupational segregation, it is likely that child poverty would fall. We have taken a range of action already, including the following.
- We now require listed public authorities in Scotland with more than 20 employees to publish their gender pay gap every two years.
- Our National Science, Technology, Engineering and Mathematics ( STEM) Education and Training Strategy (2017) is tackling occupation segregation. This Strategy outlines a five year programme of action to promote excellence and equity in STEM and to inspire and connect learners of all ages to STEM careers and opportunities. Skills Development Scotland's Equalities Action Plan for Modern Apprenticeships also includes activity to address gender imbalance within some apprentice occupational frameworks ( e.g. women in STEM related apprenticeships).
- Women are more likely to take a break from paid employment when they have children, and this can lead to downgrading of careers once they return to paid employment. Our Returners programme is currently rolling out a number of programmes across Scotland to help parents (mainly women) to return to careers, ranging from financial services to security and childcare.
- We have funded Close the Gap to challenge and change employment practices and workplace cultures and Family Friendly Working Scotland Partnership to support and promote the development of family friendly workplaces across Scotland.
While this is a platform to build on, we recognise that there is more work to do in reducing the gender pay gap, for the Scottish Government, the wider public sector, and the private sector. We will therefore establish a stakeholder working group to plan activity from baby to boardroom to reduce gender pay gaps as part of the Scottish Government's inclusive growth vision. The working group will consider specific and timed actions to drive improvement across all sectors for the short, medium and long terms. It will take an intersectional approach, which means recognising that people's identities and social positions are shaped by multiple factors including age, disability, ethnicity, religion and belief, sexual orientation and socioeconomic background. There will also be a focus on the priority families in this Delivery Plan to help reduce child poverty. The group will develop evidence based proposals for Ministers' consideration by the summer of 2018. We will report back on action taken in our first progress report in 2019.
We recognise that addressing pregnancy and maternity discrimination at work will also help to reduce the gender pay gap and improve the economic position of women in Scotland. Despite the Scottish Government not having powers over employment law, as part of our commitment to helping women fulfil their potential in the workplace, we wanted to address this important issue and established a Ministerial working group in December 2016. As part of its remit, the group has produced new guidance for employers and has been actively promoting this to encourage best practice. A paper outlining the group's work to date is available online  . Next steps for the working group will consider how it can continue to support the priority groups identified in this Delivery Plan. In particular, ensuring websites such as Ready Steady Baby, NHS Inform and The Parent Club, that are targeted at supporting pregnant women and new mothers, include links to the relevant pregnancy and maternity guidance such as those published by the Equality and Human Rights Commission and ACAS. The group will also work with Healthy Working Lives as they consider their range of resources for employers on health and safety awareness and risk assessments.
Additional investment and resource to support delivery of the strategy will be announced during the course of 2018-19.
Potential for impact on all four targets through earnings. By tackling gender inequality, all priority groups should benefit.
The Workplace Equality Fund
The Poverty and Inequality Commission's advice noted that we need to address inequalities in access to work and to in-work progression rates to make progress reducing child poverty. The Workplace Equality Fund will support employer-led, innovative solutions to overcome barriers faced by the people who work for them. The Fund will help some of our priority families, with a key focus on women, disabled people, and those from a minority ethnic background. The Fund will also support older workers (those over 50).
This Fund is a new investment by the Scottish Government to promote equality at work. We expect that proposals to the new Fund will focus on overcoming long standing and systemic issues with recruitment practices and progression in the workplace. This could include for example counteracting unconscious bias, promoting a positive culture towards pregnancy and maternity and/or introducing family friendly practices in the workplace.
The first round for applications to the Workplace Equality Fund was opened on 8 February 2018 and a second round of applications will open on 2 July 2018. We will now increase the total Fund to £750,000, with a particular focus on parenthood, the Delivery Plan's priority groups, and on progression, as a response to the Commission's advice.
£500,000 has been allocated from the 2017‑18 budget, and an additional £250,000 will be allocated from the 2018-19 budget.
Potential for impact on all four targets through earnings. By focusing on advancing equality at work, our priority families should benefit.
New support for flexible working
Parents consulted for this Delivery Plan said that employers should be willing to offer more flexible working hours or work patterns. Without flexibility in childcare provision, it felt to some like returning to work after having a baby was often very difficult. Employer flexibility was also seen to be key for emergencies faced by parents such as looking after an unwell child. Similarly, the Commission advised us to consider how the Scottish Government can work with employers to improve the quality of part-time work.
The Fairer Scotland Action Plan set out a range of actions on supporting flexible working, including development of Scotland's first Flexible Jobs Index, which was published by Timewise in 2017. Timewise found that amongst jobs in Scotland paid £20,000 FTE or more, only 11.9% were advertised with flexible working options at the point of hire. They argued that employers consistently underestimate how much employees value flexibility and, because flexibility rarely features in employer recruitment, they miss out on the many skilled candidates who can only consider flexible jobs.
Flexible working is important for most parents - and in particular for women, who are often the main carers of children and for disabled people, who may need additional adjustments. Parents stand to gain significantly from increases in quality jobs that are genuinely flexible, helping them balance work and family responsibilities. So we want to consider what more we can do across this parliamentary term to support flexible working.
We will invest monies from the Tackling Child Poverty Fund to deliver new programmes with partners to encourage employers to change workplace cultures. And we will work with Timewise and our other partners to produce an update of the Flexible Jobs Index Scotland for 2020.
As Timewise said in their Flexible Jobs Index:
" It is time to radically change the way jobs are designed and advertised, moving towards flexibility by default. 'Normalising' flexibility will help create a fairer Scotland: more people will be able to access quality work; we will see greater equality as women and men can progress in their careers while working flexibly and working families will have a better balance between home and family life."
We will be investing resources from the Tackling Child Poverty Fund, to support this work. Details to be confirmed in a future progress report.
Potential for impact on all four targets through earnings if it helps parents stay in work and progress. Flexible working is likely to be of particular benefit to women.