Fair Work Secretary - Flourishing Workforce
Roseanna Cunningham, Cabinet Secretary for Fair Work, Skills and Training
The Royal College of Physicians, Edinburgh
5 February 2015
This is a great opportunity both to speak, and more importantly to listen, as you explore ways in which you can develop a Flourishing workforce in public services in Scotland.
If we are going to change the culture of what work means then events such as this showcase exactly the kind of progressive thinking and collaboration we need to see in Scotland.
So, I want to explore three areas with you this afternoon.
Firstly, I’d like to look at what we are doing, as a Government, to address the legacy of the downturn.
I’ll then outline our plans to build more resilience into the labour market to protect from future recession and move us towards a higher wage, higher skill, fairer and more inclusive jobs market.
Finally I want to explore with you what Government can do to create a culture within which Fair Work can grow.
I’m sure much of what I will say will chime with your discussions this morning. Public services in Scotland have an opportunity to shine - or should I say flourish – and lead the way in this approach to work.
Don't be too shy about what you are doing.
We need examples of good practice to encourage others to follow.
Part of your role as leaders of today is to develop the workplace we want for the generation of leaders who will follow you. We are limited in the levers we have so we will build a movement out of inspiration and example. My invitation to you, is to lead the way.
Before I look forward I want to reflect on the impact of the global recession for people in Scotland. This recession was the deepest in over 50 years, during which Scotland’s GDP fell by 5.4 per cent, while the unemployment rate increased from 4.0 to 8.8 per cent.
The recession led to an additional 131,000 Scottish people becoming unemployed and although not as bad as countries such as Italy and Spain, not to mention Greece, this has had a significant impact on many Scottish people’s lives.
However, Scotland’s economic recovery is now well established. Our economy has grown continuously for two years, GDP is above pre-recession levels and the economic outlook is the strongest it has been for many years.
The recovery has also been evident in the labour market. Our inactivity and unemployment rates are lower than in any other country in the UK and the employment level in Scotland is at a record high. Youth unemployment is also at its lowest level in five years.
But there is still a fair distance to travel before the damage caused by the recession is repaired.
The number of people underemployed, though falling, remains high; youth unemployment, though at its lowest for 5 years, remains high; real wages are still well below pre-recession levels.
The aim of the Scottish Government is to do better than simply return to pre-recession levels of economic performance.
Building a labour market that is resilient, adaptable and responsive to change will take time but doing so will be key to ensuring that Scotland continues to compete internationally and is able to deliver long-term prosperity.
It is also vital that the right balance of growth is supported. The recovery has been uneven and unequal.
We want growth that reduces inequalities and allows everyone to realise their potential.
I believe we are on the threshold of a different approach in Scotland as we work to build an economy on a foundation of inclusive growth.
We are not alone in our belief that this is feasible, achievable and desirable.
Joseph Stiglitz, a Nobel Laureate and member of the First Minister’s Council of Economic Advisers, has commented:
“…there need not be a trade-off between inequality and growth. Governments can enhance growth by increasing inclusiveness. A country’s most valuable resource is its people.”
Analysis by the OECD has demonstrated that income inequality has a negative impact on economic growth, while the IMF has also found that more unequal countries tend to have lower and less durable economic growth.
And, in his State of the Union Address last month, President Obama was clear in the choice open to America when he said:
“Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?”
I am certain which choice is best for Scotland – it is Fair Work. Our commitment to improving employment in Scotland is not new.
This Government responded quickly and effectively to support young people from the start of the downturn, and has successfully implemented a range of ambitious reforms across the education and skills systems.
Our Youth Employment Scotland Fund is one example where, working with Local Authorities, we aim to provide up to 10,000 young people in Scotland with support, to move into sustained employment.
We are also looking to protect our young people from the impact of future economic traumas.
Sir Ian Wood’s Commission for Developing Scotland’s Young Workforce made recommendations to develop a world class system of vocational education and training - a characteristic of countries with low youth unemployment.
Building on the success of our Modern Apprenticeship programme, we are now implementing these recommendations and embarking on a long term programme to develop the young workforce, with the ambition of achieving a 40% reduction in youth unemployment by 2021.
This will transform the experience of many of our young people as they navigate their way from education to the world of work. We want to ensure that all of Scotland’s young women and men have the choices and opportunities to fulfil their potential.
However, we need to do more than make sure our young people are skilled and able to take jobs. We are working to build a coalition around a vision of a higher skill, higher wage economy, with a fair and inclusive jobs market. The launch of the first industry led Regional Invest in Young People group in Glasgow this morning is an example of our emerging partnership with industry and employers – including public sector employers – which will move us towards this vision.
Equality and diversity are key to this.
Our long term aim is to increase diversity across public life in Scotland. Doing so encourages new and innovative thinking, leading to better business decisions which ultimately benefit our economy.
The First Minister is clear there should be no limit to your ambition or what you can achieve. If you are good enough and if you work hard enough, the sky is the limit. There should be no glass ceiling stopping women achieving their ambitions and no sticky floors to make it difficult for women to progress in the first place.
To support this the Scottish Government has introduced a number of policies aimed at challenging organisations across the public, third and private sectors to encourage greater gender diversity by increasing the percentage of women on Boards.
This Government has demonstrated that it will lead by example in this area, from the Cabinet down.
In Spring 2015 we will launch a voluntary Partnership for Change encouraging organisations across the public, third and private sectors to sign up to achieving a 50:50 gender balance on boards by 2020.
I would like to take this opportunity to invite you as leaders of your organisations to support the Partnership for Change commitment and work with us to deliver greater equality in the workplace as part of Fair Work.
One of the most visible expressions of a commitment to Fair Work is employers who choose to pay the Living wage.
The Scottish Government fully supports the Living Wage campaign – recognising the real difference the Living Wage makes to the people of Scotland, particularly those on low incomes.
We are leading by example, ensuring all staff covered by our own pay policy receive the Living Wage.
And yesterday we published guidance for public purchasers which offers practical guidance on how they can better promote fair employment practices.
It addresses a range of important issues, such as fair pay, including payment of the living wage, and fair employment practices, including the inappropriate use of zero hours or umbrella contracts.
This Government has put tackling inequalities at the heart of all we do and it follows that other public bodies should do the same. And I know you are all committed to this.
By paying a living wage to employees across the wider public sector, 20 per cent of Scotland's workforce would be earning a living wage.
This sets a great example and gives a strong signal to the private sector to seriously consider the fairness of their pay policies.
Adopting a policy of fair pay for all workers is essential. And this must include those just starting out.
Today I am calling on all public service leaders to ensure, as a matter of urgency, that all MAs within their organisations are paid at least the UK adult minimum wage rate and not the lower UK MA rate.
And where affordable, we want the public sector to go further and ensure youth workers, whether MAs or interns, receive the living wage if they are doing a job equivalent to someone who is already receiving that level of pay.
By setting an example the public sector in Scotland can deliver a gold standard of fair pay and fair work for the rest of employers in Scotland to follow.
As a sector we want to collectively be proud of:
• our commitment to fairness,
• our commitment to supporting our young workforce, and
• the part we have played in building an economy and a country where fair work and fair pay are the rule and not the exception.
The youth of today, and tomorrow, simply cannot afford for us to let this opportunity slip by.
To support our wider engagement with all employers, we are funding the Poverty Alliance to promote take up of the Living Wage Accreditation Scheme and to increase the number of employers in all sectors across Scotland paying the Living Wage.
In the Programme for Government we announced an additional £200,000 [£80k increasing to £280k] for the Poverty Alliance to drive this work forward and the First Minister set the target of increasing the number of accredited employers to at least 150 by the end of 2015. At the end of January we had 120 employers signed up.
Fair Work however is about more than this. It is more than just substituting a Living Wage for a Minimum Wage - it also implies a different kind of contract.
One which is characterised by dignity and respect between employer and employee; where there is positive engagement and the potential for development; where employers and employees deliver - and benefit from - a sustained increase in innovation and productivity.
In the context of public service delivery this would extend to positive engagement with individuals and communities, who might then become active partners in service design and delivery.
To help us promote Fair Work on a broader scale we need leaders across all sectors to show the benefits that embracing Fair Work can bring.
Fair Work is a priority for this Government, so we were delighted to be able to announce an additional £200k to support further progress in this area in the Deputy First Minister’s budget statement yesterday.
I believe your work will make an important contribution to this - and will in turn be supported by our commitments to create a Fair Work Convention.
The Convention emerged in part from the independent Working Together Review which was convened last year.
Patricia Findlay, who is here today, was an important member of the independent Review team. It recommended that a fair employment framework should be developed through a new stakeholder body with representation from trade unions and employers and that the framework should be based on 'what works' principles and clear responsibilities for unions, employers, employees and workers.
Since plans to establish a Fair Work Convention were announced, we have been talking to key stakeholders - essentially employers, employees and trade unions - about the detail.
We have heard a range of views. There was a strong consensus which welcomed the Convention and favoured collaborative work to boost employee engagement, innovation and productivity at business, regional and national levels.
We are now finalising the remit and membership of the Convention, and I will make a more detailed announcement on this soon.
The Convention’s work will complement the Scottish Business Pledge that was also outlined in our Programme for Government.
The principle of the pledge is straightforward - but it bears repeating.
It enshrines the idea that just as Government will work with business to create a prosperous and strong economy, so business can play a part in delivering a flourishing and fair society.
We want companies to commit to good business practices - such as innovation or internationalisation - and to good employment practices; such as the living wage, gender equality or supporting workforce engagement.
Fair work can be a powerful force for human improvement and fulfilment. It can help achieve many of the things we want for ourselves and our country – dignity and purpose; health; learning.
This is not new. Scotland has a proud history of leading developments in the workplace.
Think, for example, of Robert Owen’s work at the New Lanark Mills. Owen bought the Mills with a plan to modernise and improve the working and social conditions of its workers. His improvements included shortening the working day and introducing a minimum age – yes age, not wage – for apprenticeships.
Jimmy Reid also promoted a different way. In his inspiring Glasgow University speech he compared Scotland’s natural and human resources:
“The untapped resources of the North Sea are as nothing compared to the untapped resources of our people. I am convinced that the great mass of our people go through life without even a glimmer of what they could have contributed to their fellow human beings."
We will never abandon our efforts to support people most affected by the recession.
And we want to create a different kind of labour market – skilled, fair and inclusive –which can weather future storms, and start to create the kind of equality that will further fuel economic growth.
It is no surprise that huge problems emerge when you stop treating people like people, and treat them like units, or cogs in a machine. There are also huge untapped resources that can be released if we can find a way to genuinely access the assets of our workforces.
You as leaders have an important role to play. My challenge to you is to ask what you can do as a leader in public service to create Fair Work – and do it.
Together, we can transform workplaces and communities – and the reality of working life for this and future generations.
Fair Work is an idea whose time has come.