Making Scotland's future - a recovery plan for manufacturing: fairer Scotland duty assessment

Summary of evidence

The purpose of this section is to set out general evidence of how this Recovery Plan will impact on inequalities caused by socio-economic deprivation as a result of the impact of COVID-19 on the Scottish manufacturing sector.

We have drawn a significant amount of evidence from a number of areas including published statistics, industry specialists, businesses, trade unions and academia.

To identify any potential improvements, we have undertaken a full consultation on the Recovery Plan, which lasted for a period of 10 weeks starting on 4 December 2020 and closing on 12 February 2021. The final Recovery Plan, incorporating the consultation feedback was published in June 2021.

At the same time we also consulted with appropriate stakeholders on an Equality and Fairer Scotland Duty Impact Assessment and a Business and Regulatory Impact Assessment covering the Recovery Plan.

Through widely publicising the ongoing consultations and encouraging responses from as wide a group of stakeholders as possible we will be able to reflect as many viewpoints as possible.

Evidence ingathered to date shows that:

• 83.3% of employees in the manufacturing sector earn the Living Wage, compared to 84.8% of workers in Scotland overall.^[1]
• The Scottish manufacturing sector gender pay gap is 14.1%, compared with 3% in Scotland overall. This could be as a result of the fact that 23.4% of Scotland's manufacturing workforce is female, compared to 48.8% of Scotland's overall workforce^[2].
• 38.7% of manufacturing jobs are classed as low or medium skilled, compared to 44.7% of all Scottish jobs.^[3]
• 97.3% of employees in manufacturing were securely employed (defined as either permanent or temporary and employee did not wish to be permanent) compared to 96.5% for Scotland overall.

The Scottish Index of Multiple Deprivation (SIMD)^[4] is an official statistics tool to help identify relative deprivation across areas of Scotland, ranking the country into 6,976 data zones from most to least deprived.

The data shows a broad correlation between areas with a strong manufacturing base and larger proportions of deprived areas.

As manufacturing provides secure, relatively highly skilled and comparatively well-paid employment this indicates the importance of manufacturing as a source of employment in these areas.

Where manufacturing is a relative strength of an area it provides a solid basis on which to build the local economy and in a way which offers a route to secure, skilled employment with associated knock-on impacts of increasing supply chain opportunities and demand for wider services in the local economy. This can further create or support further employment opportunities in an area.

Possible impacts of Making Scotland's Future – A Recovery Plan For Manufacturing

The Recovery Plan has been developed with a commitment to Fair Work principles at its heart. It is understood that the impact caused by the pandemic has exacerbated the inequalities which already exist in society. The Recovery Plan has been designed to work in conjunction with Scotland's existing manufacturing support infrastructure to ensure that its impact is felt throughout Scotland and that all parts of the country feel the benefit.

Collaboration and networks

The actions proposed in the Recovery Plan will promote and foster collaboration and networking, and provide an opportunity to create links between areas of greater and lesser socio-economic disadvantage, allowing manufacturing enterprises from different parts of the country to work together, share resources, costs and risks. This will help to safeguard and create jobs in all parts of Scotland – improving outcomes and helping local communities.

The Recovery Plan includes an action designed to create a programme of activity to help small and medium sized enterprises (SMEs) develop their business cases and provide them with help and resources to enable them to maximise opportunities to secure external funding. SMEs are found throughout Scotland and can act as important employers for local communities. Supporting Scottish manufacturing SMEs is an vital part of ensuring that the recovery plan benefits all areas of the country.

Supply chains and competitiveness

The disruption caused to global supply chains by the pandemic has highlighted the importance of resilient and responsive supply chains. A series of actions included in the Recovery Plan are designed to promote excellence and innovation in the Scottish manufacturing supply chain. These actions seek to support inward investment, identifying opportunities for Scottish manufacturers created by new and emerging supply chains to bring more business to Scotland. By revitalising Scotland's manufacturing supply chains the Recovery Plan will create a more resilient manufacturing sector in Scotland as well as creating opportunities for manufacturers throughout the country – protecting jobs and ensuring that benefits are widely felt.

Adaptation and transformation

The Recovery Plan sets out several actions which encourage digital transformation of Scottish manufacturing. By adopting new digital solutions manufacturers can become more efficient and resilient and put the sector on a path to being truly world-class. The Recovery Plan recognises that, in order to be achievable, transformative solutions need to applicable to the SMEs that make up the bulk of the Scottish manufacturing sector (97% of companies have fewer than 100 employees).

By encouraging manufacturers to adopt new energy efficient, low carbon digital solutions the Recovery Plan seeks to support the transition to a circular, net-zero economy. In helping to creating a high-tech, low carbon manufacturing sector in Scotland the Recovery Plan will also create more rewarding, high skill jobs and help to improve health outcomes.

Skills and workforce

The disruption caused by the COVID-19 pandemic has created significant uncertainty in the labour market. Some sectors, such as aerospace and oil and gas have been disproportionately affected by the current economic conditions.

The Recovery Plan includes a series of actions designed to help address these issues in the labour market while safeguarding jobs and promoting Fair Work principles. It includes an action designed to create a programme for sectors adversely affected by the pandemic to support displaced workers and help them re-skill for jobs in growth sectors. It also includes actions designed to protect apprenticeships and tackle graduate unemployment.

Throughout all of the actions designed to address emerging skills shortages and jobs growth there is a commitment to promote progressive Fair Work principles, ensuring that people from all areas and backgrounds will benefit from the activity.

Alternative approaches

Due to the unprecedented nature of the pandemic, together with the requirement to develop and move towards implementing the plan at pace we have had limited opportunity to consider alternative approaches. Consideration has been given to COVID-19 recovery plans concurrently developed for other industry sectors – such as the Scottish Construction Industry Recovery Plan published by the Scottish Construction Leadership Forum - but it is vital that Making Scotland's Future: A Recovery Plan For Manufacturing is specifically focused on the requirements of the Scottish manufacturing sector.

It should also be noted that Making Scotland's Future: A Recovery Plan For Manufacturing has been developed through the Making Scotland's Future Programme Board. This provided an opportunity to consider the actions proposed from a variety of viewpoints and to ensure it meets the specific needs of Scottish manufacturing.

Consultation response

The response to the consultation held on the draft Fairer Scotland Duty Assessment suggested that people in a lower socio-economic group who are on lower incomes are likely to have less access to flexible working which could become a barrier to workforce inclusivity. This could disproportionately affect women (due to childcare) and disabled people (who may be less able to work a five day week). The consultation response was keen to see the actions set out in the Recovery Plan continue to drive flexible working in the manufacturing sector as this is something which could ensure that certain groups of people are not disadvantaged.

In 2019, 6.9% of the 23.4% of women (13,100 women) who work in the manufacturing sector had children aged younger than 16 years. This low number, and the fact that 91.2% of workers in manufacturing work full time, would suggest that manufacturing is not an occupation which lends itself to flexible, part-time work, which women may need and this is something which could be improved upon.

Making Scotland's Future: A Recovery Plan for Manufacturing includes a strong commitment to Fair Work which sets out the principles for engagement and intervention. The actions under the Skills and Workforce priority theme provide an opportunity to address some of these issues more directly. Additionally, the Adaptation and Transformation priority contains actions designed to encourage digital transformation of Scottish manufacturing. This provides an opportunity to explore whether technology can be created that could be used by people working from home, or at least allow for greater flexibility in the workplace, allowing people, in particular women, to better balance childcare with work.

More broadly, there are other interventions which are available to help manufacturing companies implement flexible working . In particular, the Scottish Government's Workplace Equality Fund makes funding available to support employers to improve their diversity and inclusion strategies, including flexible working, and support equality groups to progress in the labour market.

Ensuring full and part-time work opportunities that offer flexibility for women aligns to the Scottish Government Gender Pay Gap Action Plan. The aim of the plan is to deliver a cross-government approach tackling the causes of inequality women face in the labour market, taking an intersectional approach to recognising that women can experience multiple barriers in the workplace, i.e. ethnicity, age, socio-economic group. The plan includes ensuring new skills investment focuses on areas of job growth aligning with Scottish Government National Mission for job, regardless of gender.