Fair Work Action Plan: impact report 2025

5. Embedding Fair Work in public sector spending

5.1 Aims

We will continue to use conditionality to further embed Fair Work in all forms of financial support.

5.2 Delivery overview

Action

2.1: Extend Fair Work conditionality

Status

Not started

Action

2.2: Update Fair Work First criteria to address labour market inequalities

Status

Complete

Fair Work First (FWF) is the Scottish Government’s flagship policy for driving high quality Fair Work and workforce diversity across the labour market in Scotland by applying Fair Work criteria to grants, other funding and contracts being awarded by and across the public sector, where it is relevant to do so.

• Under FWF recipients of a grant awarded on or after 1 July 2023 must pay at least the real Living Wage and provide appropriate effective voice channels as conditions of grant.
• Between April 2024 and March 2025 FWF has been applied to over £3.42 billion of public sector grants.

5.2.1 Delivered to date

• The Scottish Government is currently focused on implementing Fair Work conditionality in public sector grants and will be undertaking an evaluation of FWF before exploring options to extend conditions to other forms of support. The evaluation will run from July 2025 to July 2026 and is supported by a Research Advisory Group.
• A Business and Regulatory Impact Assessment (BRIA) of FWF conditionality in public sector grants was published in February 2025. The assessment focused on the two mandatory requirements concerned with payment of the real Living Wage, particularly for apprentices and 16- to 17-year-old workers, and providing effective voice channels for workers. Following consideration of the BRIA the Minister for Employment and Investment concluded that the FWF conditionality policy for real Living Wage and effective voice will not be changed and will continue to be implemented in line with the Scottish Government’s FWF guidance.
• Updated FWF Guidance was published in November 2024, refining administrative processes and providing clarity in response to stakeholder feedback. It included updated wording to better reflect priority action required to address labour market inequalities faced by women, people from racialised minorities, and disabled people.

5.3 Related actions across the Scottish Government

• Fair Work First in Procurement eLearning was launched in December 2024 on the Sustainable Procurement Tools website. This training is mandatory for relevant staff in the Scottish Government. The training has also been shared across the wider public sector in Scotland and with the Supplier Development Programme, whose aim is to build the capability of Scottish private and third sector businesses that are keen to compete for public sector contracts. By 31 March 2025, 145 people had completed the e-learning.

  5.4 Progress indicators - overview

  • The proportion of regulated contracts awarded by public bodies that contain a scored FWF criterion increased from 25% in 2019-20 to 41% in 2022-23.
  • 95% of suppliers with a live Scottish Government contract have committed to pay the real Living Wage.
  • Partial data is available on grants awarded with FWF criteria, following survey data gathered by the Scottish Government covering 2024-25. This does not present a complete picture of all grants awarded.