Labour Shortages debate: Cabinet Secretary's statement

Statement by Finance and Economy Secretary Kate Forbes opening the debate, Addressing the Impacts of Labour Shortages on Scotland’s Economy, in the Scottish Parliament, Edinburgh, on Tuesday 11 January 2022.

Presiding Officer.  

Today, I am asking Parliament to agree to urgent and joint action to address the labour market challenges that we are facing as a result of the Covid-19 pandemic and Brexit.

The Scottish Government has been actively working to resolve these challenges over a matter of months – but we need the help and support of this Parliament and of the UK Government.

That is why I am calling on this Parliament to support this Government’s work to protect the provision of services and the delivery of goods through our supply chains, and calling on the UK Government to commit to establishing a Joint Task Force on Labour Market Shortages with the Scottish Government.

We need action and engagement from the UK Government. We need a migration system that works for Scotland. Yet it is clear that the UK immigration system is not meeting Scottish businesses, and the wider Scottish economy’s, needs.

Instead of engaging constructively with us on how to develop a system that works, we had to make 19 requests before the Immigration Minister was even willing to attend a meeting.

Immigration impacts on our economy, our public services and our communities and we need a commitment to genuine ongoing engagement. We need a migration policy tailored to Scotland’s distinct needs.

Employers across many sectors and regions of the economy are facing continued workforce challenges. I cannot imagine there’s a single MSP in this chamber who hasn’t been confronted by those issues directly from businesses in their constituencies.

In the latest published data, which is from November 2021, over one-third of Scottish businesses reported experiencing a shortage of workers. Candidate supply for permanent jobs also reached an all-time low in the same month. And almost half of businesses in the accommodation and food sector reported difficulties filling vacancies during this period, as did more than half of construction, health and social care and transport and storage businesses.

Instead of wishing away those figures and the acute impact on businesses, I have come to the Chamber today to try and find solutions and one of those is ensuring we have freedom of movement and a migration system that works for Scottish businesses.

While some of these issues are not new, they have been severely exacerbated by the situation over the past year. Time and again this Government has argued that Brexit would be a disruptive force to Scotland’s society and economy.  Two years on, that has clearly been the case and there are very few who would argue it hasn’t been.

The ending of freedom of movement has made it more difficult for those sectors which have traditionally relied on EU citizens.

For many EU citizens, Brexit, together with the narrative from the UK Government, has changed their relationship with the UK. We want to support EU citizens and help them to stay here so we are providing information, advice and support through our Stay in Scotland campaign. But EU citizens should never have been forced to apply to retain the rights that they already had.

We have explored the option of providing physical proof of status for EU citizens but it is not within devolved powers. So we will continue to press the UK Government to provide physical proof and to safeguard the rights of EU citizens.

While there remains strong business demand for staff across the economy, businesses continue to suffer from a low number of applicants overall and that has further exacerbated existing pressures around shortages of materials and workers and amplified mismatches between supply and demand caused by the pandemic.

So what are we doing about it? In June, the Minister for Just Transition, Employment and Fair Work outlined how employers across a variety of sectors were struggling to recruit workers into business critical roles. At the time, employers in food and drink manufacturing reported an unprecedented drop in the availability of workers over the first six months of 2021, while a shortage of around 76,000 HGV drivers across the UK meant that many supermarkets were struggling to keep their shelves well-stocked.

Many businesses in the accommodation and food sector also entered the busy holiday period without the number of staff they needed to meet customer demand. And one in five small businesses reported that they could close or have to radically change their business model due to the increased difficulty in recruiting EU workers at the time.

And so we have been working with businesses and employers to develop and implement mitigation measures in response to these shortages.

We have developed a Working with Business Action Plan, which identifies new and existing actions that can be taken forward alongside business and partners such as skills agencies. The Plan aims to mitigate the impacts of those shortages and help stimulate economic recovery through a range of employability, skills and sector-specific interventions.

That approach aligns with our National Strategy for Economic Transformation, which will set out the Government’s plan for strengthening Scotland’s economy through national and regional action over the next 10 years.

We will work with business, education providers and enterprise and skills agencies to address sector specific recruitment and retention challenges, including current and emerging skills and labour shortages.

As part of those measures, the Scottish Government and Skills Development Scotland is working with a range of sectors to support future workforce planning. Skills Development Scotland is working in conjunction with appointed childcare training providers to develop and deliver a taster programme in childcare for those over 25 who have been made redundant or face the risk of redundancy, and for returners to the labour market. This enables these individuals to apply for entry level positions in the childcare sector, while addressing the retention and recruitment challenges which private and third-sector providers are facing.

Skills Development Scotland are also working with Quality Meat Scotland on a project to encourage young people into the sector. The project aims to future-proof the red meat industry by ensuring there is a pipeline of employees who have the skills and knowledge to provide a workforce for the industry.

To pick on another sector, through our Manufacturing Recovery Plan we are working in collaboration with industry, academia, business organisations and trade unions to deliver a set of targeted actions against four key priorities – one of these being Skills and Workforce.

National Transitioning Training Funding of £1.98 million for the National Manufacturing Institute Scotland also directly supports this priority. That is in addition to the earlier establishment of the Manufacturing Skills Academy as a key element of our £75 million investment in the Institute.

We recognise how vital the manufacturing sector, as well as the childcare sector and the red meat industry, are to Scotland’s recovery and just transition and we look forward to the opening of the Institute’s HQ in the Autumn.

We need to identify how to support people into key jobs and are committed to supporting young people from all backgrounds into the labour market and to ensure they have the right skills to succeed.

Our Construction Recovery Plan recognises that a particular focus is needed on the younger workforce and on getting apprentices back into work and learning. Our work to align the Young Person’s Guarantee with sector and employer needs will also open the door to more career opportunities for young people, including in sectors with current or emerging shortages.

Through our summer marketing campaign we have highlighted the diverse job opportunities available within the tourism sector, promoting tourism as a career of choice for young people and attracting new talent. We have mirrored this approach with our recent national marketing campaign, ‘There's more to care than caring’, which ran from mid-November to December, and showed the benefits of a career in adult social care to a younger audience.

I touch on these examples within specific sectors of the importance of understanding the particular issues that they face and then putting in place tangible and meaningful interventions to try and resolve the issues.

Staff shortages pose significant challenges to businesses, requiring them to become competitive in their offer to employees. But by adopting Fair Work principles and investing in upskilling and training, employers are developing a more sustainable and a more competitive approach to recruiting and retaining workers.

The Scottish Government is supporting these employers to create fairer workplaces and promoting a sectoral approach through the Fair Work Convention’s inquiries into social care and construction, and the planned inquiry into hospitality.

Fair Work will be central to our National Strategy.

Despite all of the work we are doing to tackle skills and labour shortages, many businesses and employers are still struggling due to the reduction in freedom of movement and the impact on labour mobility and supply, and pandemic-related disruption.

The emergence of Omicron has brought further challenges and insecurity for many industries, exacerbating existing staff shortages. While staff shortages and recruitment challenges are being recorded across almost all sectors, this is particularly pronounced in certain industries and sectors.

The call, as I said at the outset, is to work across Parliament, and hopefully across government, to try and bring a meaningful resolution to the challenges that businesses face, because as we emerge from COVID, and move into living with COVID, staff shortages will still be an issue that we need to resolve.

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