Emerging challenges facing the labour market
Global Climate Emergency
The Global Climate Emergency is one of the defining issues of our time and poses an unprecedented and fundamental threat to us all. We have set out the actions we will take to end Scotland's contribution to the Global Climate Emergency and transition to net zero emissions including the Green New Deal to create the right conditions to kick-start investment and build the momentum needed for it to continue longer term.
Analysis by the European Union suggests a move towards a net zero emissions economy will have a positive impact on employment in the UK. However, the Scottish Government set up the Just Transition Commission to make recommendations how to understand and mitigate risks to regional cohesion, equalities, poverty and a sustainable and inclusive labour market of the shift towards a net zero emissions economy.
Through Skills Development Scotland, the Scottish Government has committed to develop a 'Climate Emergency Skills Action Plan' to ensure it is supporting market demand for the skills required to deliver net zero emissions. Looking ahead, it is essential that upskilling and retraining opportunities are available and that the skills system has the flexibility and agility required to adapt to changing conditions.
In 2018 the Scottish Government, in conjunction with the Scottish Trades Union Congress, published Technological Change and the Scottish Labour Market to better understand how the Scottish economy would be affected by developments in digital technology in years to come. While there is general consensus that some repetitive and administrative occupations and roles will be replaced - with those roles deemed most at risk - it is anticipated that new jobs will be created. Distributional impacts may be at the forefront of some of these changes with potentially unequal impacts on regions and by gender and ethnicity.
The Trade Unions Congress (TUC) recommended that delivering a national entitlement to skills, to give everyone the confidence to adapt to changing demands should be a key focus of a fair transition to an economy with greater use of technology.
Recent research by Professor Ewart Keep for the Scottish Government's Strategic Labour Market Group - The impact of digital innovation on education, training and skills - concluded that to prevent skills depreciation and to manage the future digital skills requirements of our economy, a renewed focus on lifelong learning with an adult learning system to suit is required.
And alongside digital skills, a report published by Nesta highlights that skills such as interpersonal skills, higher-order cognitive skills, and systems skills are likely to be in greater demand in the future.
The Scottish Government acknowledges that to adapt to a changing and uncertain economic and technological landscape, individuals will need to develop their skills and adapt, perhaps on multiple occasions. While technology is likely to create uncertainty, it also presents opportunities. For example, Massive Open Online Courses (MOOC) - free web-based distance learning programmes - may play an increased role in future, offering a viable route for learners to develop their skills via remote e-learning.
International uncertainty and Brexit
In June 2019 the World Bank downgraded international growth forecasts for 2019 to 2.6%, rising to 2.7% in 2020 and 2.8% in 2021. This unease has been exacerbated by the UK's decision in 2016 to leave the European Union.
The Scottish Government is clear that the UK's withdrawal from the EU, in any form, will have a damaging effect on Scotland's society and economy. Analysis by the Office of the Chief Economic Adviser suggests a 'no deal' Brexit could increase unemployment to around 8% - an additional 100,000 people out of work.
The sectors of our economy deemed most at risk from Brexit, such as manufacturing, where non-UK EU nationals make up relatively larger proportions of the workforce, may experience reduced labour supply and worsened skills gaps through reduced migration.
In the longer term, Brexit may create a greater need for older workers to upskill and/or retrain if sectoral downturns lead to job losses. Workers leaving these industries may have highly specialised skills and require significant re-skilling to secure employment in other sectors.