Underemployment Inquiry
Good morning, ladies and gentlemen, and welcome to the seventh meeting in 2013 of the Economy, Energy and Tourism Committee. I remind everyone to turn off their mobile phones and other electronic devices. We have apologies this morning from Dennis Robertson. I welcome Joan McAlpine as his substitute. There are also apologies from David Torrance, who is running late and hopes to join us shortly.
We have a very busy agenda this morning. Item 1 is the continuation of our inquiry into underemployment in Scotland. I welcome John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, who is joined by Julie Bilotti from the employability policy team at the Scottish Government, and Graeme Roy, deputy director of the office of the chief economic adviser.
I welcome the opportunity to attend the committee to discuss its inquiry into underemployment. In evidence, the committee has heard the reasons for and the impact of underemployment. The committee will be aware that the situation is not unique to Scotland or the United Kingdom.
The issue of underemployment was highlighted in the Government’s economic strategy, which was published in 2011, and recognised as a factor that we had to wrestle with as part of our approach to delivering economic recovery. Opinions vary about the cause and circumstances surrounding underemployment, and a wide range of viewpoints have been submitted to the committee as part of the written evidence.
What all the submissions tend to agree on is that levels of underemployment, as with levels of unemployment, have risen as a result of the economic downturn and are likely to remain at higher levels than we would like until the economy is back into a period of growth. I accept that central analysis. Strong, sustained economic growth is and must continue to be the Government’s number 1 priority.
The Government’s economic strategy has allowed us to mobilise resources to support recovery and prioritise our efforts to support the Scottish economy during the toughest times of the recession. We have focused our efforts on boosting public sector capital investment; taking direct action to tackle unemployment, particularly among our young people; and boosting economic confidence by encouraging private sector investment and providing security to Scottish households and businesses.
The latest data shows that the Scottish economy has returned to growth, with output increasing by 0.6 per cent in the third quarter of 2012. Unemployment has continued to fall in Scotland over the period October to December, with a significant fall in youth unemployment. Combined with the encouraging news on growth in export sales, those figures demonstrate that progress is being made in delivering economic recovery. Essentially, that creates the conditions in which the Government will act to tackle underemployment by delivering higher levels of economic activity and growth in the Scottish economy.
Despite the welcome progress that has been made, the Government remains clear, as we set out in the Budget (Scotland) (No 2) Bill, that more needs to be done to accelerate economic recovery by creating employment and supporting Scottish business. We retain our strong focus on capital investment to assist that recovery. Over the spending review period, we will support investment of more than £10 billion in capital investment in the economy.
Crucially, through reforming post-compulsory education, we will ensure that the current and future needs of employers and the economy are central to the delivery of all our education services.
The Government’s economic strategy and our national performance framework—which, among other issues, will be the subject of the committee’s discussions with Professor Stiglitz today—recognise that we cannot have growth without equity. As such, a key priority of the Scottish Government must continue to be tackling inequalities throughout Scotland.
For example, we have noted the impact of the downturn on young people and have taken rapid and unequivocal action to help more of them into employment. That includes young people with additional support needs, and we are ensuring that all our interventions to support individuals back into employment are person centred. That work is vital, and it extends from young people to a wider cross-section of the country to ensure that the entire labour force is able to fulfil its contribution and potential in the economy.
We have recognised that there are difficulties with some of the equality data that is available to support us in tackling inequality. In June, we launched the equality evidence finder. In December, we launched the equality evidence strategy, which will examine how particular evidence gaps can be filled. Any observations from the committee in that respect would be helpful.
It can be argued that, in difficult times, underemployment is better than higher levels of unemployment. However, there is no doubt that people on low earnings levels will nevertheless be suffering financial difficulties as a result, with some groups being harder hit than others. Strong and sustained economic growth is essential to lowering levels of underemployment, and the Government is doing everything in its powers to achieve that.
I am sure that members will wish to pursue a number of areas in questions. We are tight for time, and I know that you need to be away to the Finance Committee by 10.30, cabinet secretary. I ask members to bear that in mind and to keep their questions short and focused, as ever. Answers in a similar vein would be welcome so that we can get through the topics in the time available.
I will pick up a point to which you referred, about the changing nature of the employment market and the issue of labour market trends. Much of the evidence that we have heard supports the view that there has been a rise in underemployment following the economic downturn. However, underemployment was a feature of the jobs market even before that. Is it the Scottish Government’s view that high underemployment is now a permanent feature of the labour market? Is it here to stay?
No, it is not. One could take that view only if one believed that there was no prospect or possibility of delivering higher levels of economic growth in Scotland. I would summarise my view as being that there is an inextricable link between levels of economic activity in the economy in general and the level of underemployment.
There are two distinct aspects to underemployment, and they should be considered distinctly. The first is where people are unable to obtain the necessary period of employment—I am thinking of working hours and so on—to provide them with an acceptable level of remuneration as a consequence of their economic activity. The second is that there is a separate group of people who, frankly, are operating at below their capability.
Those two different and distinct elements can be resolved, in different ways, through an improvement in economic activity. If the economy is more buoyant and there is more demand, people who are operating on restricted hours may well be able to operate over longer hours, and the level of underemployment can be tackled in that fashion. For people who are operating below their skill level, we have to attract and create employment opportunities that deliver the necessary skills capabilities and skills utilisation.
Those are both features of economic growth, but they have to be delivered in distinct ways. We therefore highlighted the importance that we attach to underemployment and the need to tackle it within the Government’s economic strategy.
The committee took evidence from Professor Bell, who, along with Professor Blanchflower, carried out a study in this area. Professor Bell seemed to be unsure whether underemployment was a reasonable response on the part of employers to reach a compromise and perhaps mitigate job losses, He seemed uncertain about whether such a response was good or bad, and he did not really commit himself either way. To what extent is that phenomenon beyond the powers or control of the Scottish Government?
My general view on the debate on which Professor Bell was commenting—and this commentary comes up quite frequently in economic assessments of the experience during the recession—is that people generally expected unemployment to have been higher in Scotland since 2008 than has been the case. I am certainly of that view. Given the gravity of the economic shock that we experienced, we could have expected unemployment to rise further than it did.
Unemployment is still too high, but I think that its level has been mitigated as a result of a series of good examples of employers and employees collaborating to find a way to sustain employment during difficult times. In some cases, the entire workforce has agreed to take holidays or undergo training during a certain period, so that production could be suspended without there being an impact on the company’s on-going economic position. Such approaches have preserved employment and have required a certain amount of flexibility from staff and trade unions, in a collaborative agreement with employers.
I welcome that approach, because the alternative is that employers might have to take decisions to reduce the number of people whom they employ. A lot of arrangements of that type have to be navigated and negotiated with individual employers. That is a good thing, and I pay tribute to employers, trade unions and employees who have been able to come to mature agreement about how everything fits together.
You asked about the Scottish Government’s powers, about which I have two observations. First, the spending envelope within which we operate in the public sector in Scotland requires a set of steps that we, as the Administration, have taken—I freely acknowledge them to be choices that we have made—that have resulted in the reduction in levels of public sector employment. We made a choice about having to reduce the size of the public sector workforce to live within the resources that are available to us. Of course, people can say that we should not have done that, but if they say that they must explain how we could have sustained a high level of public sector employment within the resources available.
The second point is about how the Government can contribute to the improvement and expansion of economic activity in the Scottish economy. I contend that the Government has maximised the utilisation of the powers under our control, to ensure that we had the most effective economic interventions to stimulate and support the economy. One of the reasons why unemployment was much lower in 2008-09 than we might have expected it to be is that we brought forward several hundred million pounds of capital expenditure, which sustained employment in the construction sector and enabled public sector demand to replace private sector demand, which had evaporated. There are things that we can do, but of course if we had a wider range of economic powers the Government would be able to do more.
At the outset of this inquiry, I would have agreed that underemployment was preferable to unemployment. I am not so sure about that now, given some of the evidence that we received about people who are trapped in jobs that do not pay them the equivalent of what they would receive if they were on benefits, but who cannot leave their jobs because they would be penalised. Such people are stuck in a really bad position and face poverty on an unbelievable scale.
What is the Government doing specifically to tackle underemployment? The Government has contracts and gives funding to organisations. Is there any scope for it to use its powers to discourage underemployment?
09:30
As I said, the Government recognises the importance of the issue of underemployment and therefore seeks to tackle it by ensuring that we create the conditions that maximise the employment opportunities in the economy and the opportunities for people to obtain fulfilled employment as a consequence of that activity. Of course, the interaction between the level of remuneration that individuals can obtain and the benefits system is crucial. I acknowledge that our approach to employment practices and our approach to benefits handling are in essence driven by the same considerations. That is why I think that it would be beneficial for the country if this Parliament had control over all those areas. That would allow us to manage the issues and considerations that emerge from the interaction between employment and benefits, which is a fundamental relationship in the economy.
Obviously, in the judgments that have to be made about the preservation of employment, consideration must be given to whether individuals are receiving a credible level of financial support that enables them to have an acceptable standard of living. It is certainly an undesirable approach if employers put individuals into a situation in which, if they remain in employment, they would be worse off than they would be on benefits. My view on the interaction of benefits with employment is that work must always pay. There must always be a reason why somebody should stay in employment.
I will interrupt you there. I understand what you are saying and I agree with you. However, given that the Government does not have those powers but has powers over the contracts that it issues and the people whom it employs, can it not use that mechanism to outlaw things such as zero-hours contracts and taking on people as if they were self-employed?
The Government does not utilise zero-hours contracts.
But what about its contractors? Is that written into contracts?
I cannot give a definitive answer on whether that is a factor in all written contracts, but we expect contractors to meet acceptable standards in the quality and nature of remuneration that individuals receive, and require them to meet standards that we consider to be acceptable in the management and treatment of employees. I return to my central point, which is that it is undesirable to ask employees to work under employment arrangements that are not more beneficial than being on benefits. We must always ensure that work pays.
What specifically can you do with contracting that makes that happen?
We require contractors to meet particular standards of employment practice.
Do those standards say that there should be no zero-hours contracts?
I have already said that I cannot give a definitive answer on whether that is the case in every contract. I will endeavour to provide the committee with a definitive answer on that. However, the Government expects contractors to meet high standards of employment practice in all that they do.
I understand that, but your idea of high standards might be different from mine—the issue is subjective. Are there specific conditions that have to be met?
Contractual terms exist in all those contracts and govern all sorts of different aspects. We have been through some of that territory in Parliament on many occasions with regard to the community benefit aspects of contracts and the requirement for contracts to involve the employment of a certain number of young people or apprentices, or to include particular training programmes. Contracts cover a wide variety of different considerations to ensure that the character of the approach to the employment of individuals is reflected in the contractual relationship.
I understand that you probably do not have clauses and the like to hand today, but is it possible for you to give us a flavour of the sort of clauses that exist in those contracts?
I suspect that I might be sending the committee an articulated lorry full of contractual information—
I am talking about clauses that relate specifically to underemployment.
It is perhaps better to look at it in this way: if the committee can provide us with evidence that zero-hours contracts are being implemented by contractors who are acting on the Government’s behalf, we will provide a response. That might be the best way in which to proceed with that particular question.
I disagree—the Government should impose that condition on contractors.
I will endeavour to find what information I can for the committee.
Thank you.
Alison Johnstone wants to come in on that point.
Paper 1 for today’s meeting advises us that
“The recently published Workplace Employment Relations Survey shows that”
there is an increase in the use of
“zero hours contracts”,
and highlights that there are
“surprisingly high numbers of such contracts being used by organisations in receipt of public funding.”
I am astonished to learn that
“a recent survey at Edinburgh University found 27% of staff are on such contracts”.
Indeed, almost 50 per cent of staff in one particular department are on such contracts.
It is obvious that zero-hours contracts have a huge impact on the ability of individuals to balance budgets, take on mortgages and simply meet normal everyday living costs. I want to understand more clearly the Scottish Government’s view on the use of such contracts in the public sector. Would you like to see their use decrease—and decrease rapidly? Could we perhaps tie into the public procurement process a commitment that such contracts are not used when organisations are in receipt of funding?
As I have said, the Government does not use zero-hours contracts in contracting with its staff, which is a pretty clear signal that the Government does not approve of such contracts.
We would have to consider whether there is scope and legislative competence to extend the requirement that zero-hours contracts cannot be used in procurement contracts. I will be happy to consider that with the committee when our procurement reform bill comes to Parliament in due course, which will enable us to explore some of those questions.
The Government certainly does not use or support the use of such contracts as a practice, and we are exploring other opportunities that exist to apply that approach to public sector contracts.
That would be helpful.
I have another question in a similar vein. Yesterday, as part of our underemployment inquiry, we visited Amazon in Dunfermline, which receives a generous subsidy through the regional selective assistance programme and the Scottish property support scheme. We are aware that there are issues surrounding Amazon’s payment of tax. Is there any scope for Scottish Enterprise to tie the award of such funding to criteria that state, for example, that the company must abide by taxation rules?
That is slightly off the topic of underemployment.
If we do not optimise the taxation that we collect, that impacts on the provision of public services, employment and demand, so there is a very strong link.
That is a rather tortuous connection, but if Mr Swinney would like to answer that question, I will let him do so.
I am happy to do so. Ultimately, it comes down to a judgment. Alison Johnstone will not need me to rehearse that the issues surrounding the level of tax paid by Amazon are not ones over which we have legislative responsibility.
It comes down to a choice. Either we are prepared to take steps to try to attract employment and economic activity into Scotland from companies such as Amazon, which clearly and indisputably have an economic impact, or we are not. I am confident that when the committee visited Amazon yesterday, there will have been people employed there.
There were quite a few.
There were quite a lot—exactly. It is a judgment about whether we want to attract that or not, given the challenge that we have on unemployment and the fact that there is clearly an economic opportunity that Amazon has responded to. I am sure that there are people in this room who use Amazon’s services. Either we attract that opportunity or we do not.
Clearly, we put conditions on the level of grant support that would be given. I have previously answered the convener’s questions on that in the parliamentary chamber. Grant support is not paid without conditions being fulfilled and that is all monitored. However, I could not enforce the linking of that with the taxation arrangements.
There is a judgment to be applied as to whether attracting such opportunities is a desirable and beneficial input into the Scottish economy. The Government has taken the view that it creates economic impact, and I am sure that that is welcomed by the people who are employed by Amazon.
I refer to evidence that we heard from the Department for Work and Pensions, which was less than knowledgeable about what was going on. I know that the Government has done a lot of work to try to stimulate employment, but there seems to be a disconnect with Jobcentre Plus and the work programme that has been highlighted again. Has there ever been any discussion between the Scottish Government and the Westminster Government about the Scottish Government having responsibility in some form for Jobcentre Plus?
Yes, there has. I had discussions with Chris Grayling when he was Minister for Employment. I cannot recall off the top of my head whether I have personally had discussions with Iain Duncan Smith on the subject, but I know that other ministers have.
The United Kingdom Government has made clear its position that it will not devolve responsibility for Jobcentre Plus to the Scottish Government. However, the UK Government has also made clear to us that it wants to operate collaboratively on the delivery of services in the area of what may be called the employment journey. We are involved in parts of that, as are local authorities, the DWP and Jobcentre Plus.
One of the issues that have concerned me is the degree to which all the interventions are properly and effectively integrated and compatible and do not duplicate other provision or resources that are available. I am also concerned that provision delivers maximum value for money given that different elements are provided by different organisations. In an attempt to streamline that, we have established the Scottish employability forum, which involves the UK Government, the Scottish Government and local government. It also has private sector and third sector members.
The purpose of the forum, which I, the Secretary of State for Scotland and the relevant spokesperson from the Convention of Scottish Local Authorities, Councillor Harry McGuigan, also attend, is to deliver a more streamlined service to ensure that members of the public who need employability support do not get passed from pillar to post. Does that kind of service exist today? I do not think so, and it will be a job of work to streamline things across the different bodies to ensure that individuals get the person-centred support that they require for their journey into employment and training.
09:45
I want to ensure that the information that is considered by the forum addresses that issue. We had our first session just a few weeks ago and we have asked a group led by Professor Alan McGregor, a long-standing training and employment specialist who I think will be familiar to many committee members, to explore and challenge any lack of cohesion in the provision of services and provide that information to the forum to ensure that we resolve such matters in the interest of members of the public.
Given that you have answered my second question, cabinet secretary, I will go on to question 2(a).
Another issue that we have discussed in relation to connections is graduate employment. In view of the suggestion in the very succinct and cohesive economic strategy, which straddles five or six main sectors, that 60,000 additional employees will be needed in the energy sector, are we doing enough in the school environment to encourage students to pursue courses that line up with that strategy?
We simply must ensure that that is the case not just for the school sector but for the higher and further education sectors. For far too long now, there has been a disconnect between the aspirations of the business community with regard to where growth will come in the economy and our education community’s planning assumptions about where the emphasis should lie. The fact that, with the upsurge in activity in the oil and gas and renewables sectors, there are now significant skills shortages in engineering and it is taking time to fill those gaps indicates that the approach has not worked effectively for a considerable time. The post-16 reforms, the introduction of curriculum for excellence and the modernisation of the careers service are all about ensuring that the appropriate support is in place to enable young people to be prepared for the world of work. Indeed, our thinking on our strategy in this area is dominated by the need for the education service to be clearly aligned with enabling young people to be ready for the world of work.
I know that a lot is going on to encourage young people into work. That fills the front end of the pipeline. However—and I hope that this does not sound like ageism, although I suppose that I can speak with some authority on that matter—I wonder whether at the back end we should be encouraging, say, early retirement to take people out of the pipeline and allow them to do other constructive work in society, to train or retrain or to pass on their experience to get younger people into work. I know that such a move will depend on pensions and so on, but we seem to be—for understandable reasons—focusing on how we feed the pipeline.
It would be very difficult for Government to get involved in such an area, except in its own workforce, where we wrestle with the balance of expertise, experience and capability to fulfil all the necessary requirements. Extending our role in that respect into private sector organisations and insisting on the kind of framework that you suggest would be very difficult for us.
As I said to the Equal Opportunities Committee, we must have a broader view about the contribution that individuals can make to our society than what they do during their working life. Some people conclude their working life when they are not much older than me—that is an awful thought—because they have joined a profession that enables them to do so. That should not be the end of the story. Those individuals can continue to contribute to society through a wide variety of mechanisms, of which volunteering is a good example. There are myriad other examples that can be pursued. That would be difficult territory for the Government to get into, though.
Worryingly, Chic Brodie has just asked questions about the two topics that I wanted to ask about.
The data that shows that there is a large group of people who want to work more hours also shows that there is a large group—until recently, a larger group—of people who want to work slightly fewer hours. This is so-called overemployment, which is primarily older people who would be quite happy to work a little bit less—
Careful!
I was not looking at Chic Brodie for any particular reason there.
Bearing in mind everything that you have said, do you think that we have an issue in this country with the availability of quality part-time employment and the esteem in which part-time employment is held? Is that a general cultural issue in the economy?
I have considerable sympathy with the last part of Marco Biagi’s question. There is a view that somehow part-time employment is not that desirable. Part-time employment will suit some people in our society down to the ground and meet their circumstances perfectly.
It is interesting that one of the things that have enabled us to maintain a lower level of unemployment than might have been expected during the recession has been the growth in labour market flexibility. Employers are finding that they can come to arrangements with valued and good members of staff who might have worked fulltime at some stage but for whom working parttime suits their lifestyle and fits more effectively with the choices that they have made about their life. Employers are able to make a judgment and say, “I’d rather keep a bit of this individual than lose them entirely.”
The utilisation of labour market flexibility and part-time working arrangements is entirely desirable. However, I agree with Mr Biagi that there is an issue of the esteem in which part-time employment is held.
It was certainly one of the surprises of the inquiry for me that there were so many people who—presumably, based on the data—would like to step down to part-time employment but, for whatever reason, have not.
Chic Brodie asked about higher education providers. Although they are fundamentally responsive to demand, it has been put to me that the problem is that the demand that is leading their provision is student demand rather than business demand. They are essentially facing in the wrong direction in respect of their market. That is quite a bold proposition, but I would be interested in your views on it.
Part of the context of my answer to Mr Brodie is that our education system must be more aligned with equipping individuals for employment than it has been in the past. I regularly meet representatives of the business community who express frustration at the fact that they cannot obtain the necessary skill level or experience from the output from our colleges, universities and, for that matter, schools.
What the Government has done about that has been to take forward a programme of reform to better align industrial and economic sectors with the approaches of our school, college and higher education communities.
The industry leadership groups in Scotland are indicative bodies of individual sectors. There are such groups across a whole range of sectors, facilitated by Scottish Enterprise. One of the points that I have made to the chairs of the industry leadership groups is about the extent to which we need industry to articulate more effectively its likely perspective on demand and skill requirements in the years to come. I am not going to sit here and be critical of the education service alone, as I do not think that business has been particularly good at articulating what its future demand will be. It is therefore difficult for the colleges and universities to work things out. It is all very chicken and egg, but if we can get them all lined up so that there is an open discussion about future developments and planning—the Government’s economic strategy helps to enable that, with its focus on, for example, key sectoral areas of development such as the renewable energy, food and drink and creative industries sectors—that will give a clear signal to both the business community and the education community about where we see some of the action coming in the future in the Scottish economy. We can then fine-tune some of that work to ensure that the colleges and universities can respond positively to the demands of the business sector.
I am the last member to get in, and most of my questions have already been asked. However, I will manage to ask a few questions.
On the graduate situation, in June last year, the Scottish Government announced a pilot scheme to boost postgraduate employment. Can the cabinet secretary give us an update on that? How successful has it been? Will it be rolled out across the country? What data have been collected on it?
I do not have the data details in front of me, but I am very happy to provide them to the committee. The initiative that we have taken forward has been rolled out for some time, but an evaluation of it has not yet been produced. It is therefore a bit early to judge what its impact has been.
The issue fits into a general concern about the second aspect of underemployment—I referred to this in my response to the convener’s first question—which is individuals who are not operating at the level that their skill suggests they should be able to operate. It is clear that we have a number of challenges and issues that relate to people who have a higher level of skill than the type of employment that they undertake in our society requires. That is partly about the economic conditions with which we are wrestling and the fact that the economy is not growing as dynamically as we would like it to. The opportunities for expansion and development in the economy are therefore more limited than we would like them to be, and that will obviously have a particular effect on postgraduate and graduate employment.
I will give an example. Earlier this week, I talked to a young man who has a degree in chemistry but who has not been able to find suitable work in four years. He has a job in a petrol station, but that is not acceptable.
That is the type of example that I am talking about. It is clear that there are individuals with capabilities that are in excess of the capabilities that are needed for the type of job that they undertake. The only substantive answer that I can give to Mrs McDougall is that the creation of a lot of the opportunities that would fulfil that young man’s ambitions will come from wider economic growth.
I know the area that Mrs McDougall represents. The expansion of a major firm such as GlaxoSmithKline in the Irvine area is an example of where the Government can use its good offices to work with a company to respond to its aspirations for growth. We can support companies as partners in that process, and that may well open up opportunities in which the young man may be interested. I use that as an example to show that there are ways in which we can purposefully intervene to create new opportunities.
10:00
Because that young man is now 26, he does not qualify for the modern apprenticeship scheme and other initiatives. I hope that something can be created for such people.
There is a rise in the use of zero-hours contracts across the board, but particularly among public sector employers. According to Women’s Enterprise Scotland, twice as many women as men work in the public sector. Does the cabinet secretary consider that zero-hours contracts in the public sector are reinforcing the gender imbalance in the economy?
I return to my point that I do not find zero-hours contracts desirable. That is my starting point on the issue. I am not sure that I could establish a clear relationship in considering whether those contracts reinforce the gender imbalance in the economy. However, the whole issue of occupational segregation is material to the Government’s economic strategy. We are trying to change the nature of occupational segregation in the Scottish economy through a number of interventions.
For example, we are encouraging more women to become involved in the STEM—science, technology, engineering and mathematics—subjects in the school, college and employment sectors. The women’s employment summit had a focus on the careerwise Scotland initiative, which is designed to tackle many of those matters. That is an important foundation of our approach to tackling occupational segregation, which we think is a major issue in the Scottish labour market.
One issue that faces women who want to get into or stay in work is childcare. Some progress has been made on that, but what more can the Scottish Government do to support or subsidise childcare to get women back into work?
Later this year, the Government will, through legislative provision, expand the number of hours for which childcare will be available from 475 hours to 600 hours for all three and four-year-olds and looked-after two-year-olds. That provision will come into force in 2014-15. That is one example of where we are expanding provision to enable more individuals to enter the labour market. That also relates to Mr Biagi’s point about part-time employment. The childcare issue is an example of the need to ensure that we have the right approach to labour market practices to create employment opportunities that individuals will be able to take. The balance that has to be struck with childcare responsibilities will affect the judgments of a wide cross-section of women who are re-entering the labour market.
More women are certainly interested in becoming entrepreneurs. What can the Government do to encourage more women to do that, which is an option for them?
One point that emerged from the women’s employment summit has been a focus on exactly that. Professor Sara Carter of the Hunter centre for entrepreneurship has been leading a series of discussions about women in enterprise and the formulation of greater activity to support that development. I attended the first of those sessions in Glasgow some months ago, and I intend to participate in further discussions. Indeed, at an event just last night, I discussed the issues with Professor Carter and a couple of the other participants in the process.
There is a gender segregation issue around the involvement of women in enterprise, just as there is in the labour market. There are some strong examples of women who have been able to emerge in the world of enterprise, and the Government wishes to support that.
Just last week I distributed some awards through the Government’s EDGE—encouraging dynamic growth entrepreneurs—fund, which was set up to support new entrepreneurs. I was struck by the number of women who were involved and who received awards on that occasion.
We are seeing a strong level of participation by women in new enterprise creation through a number of different enterprise initiatives—principally the Entrepreneurial Spark initiative, which emerged in Glasgow, established its second premises in Dundonald in Ayrshire and has now established a facility at Edinburgh Napier University. The Government wishes to support and acknowledge that participation.
I expect that Professor Carter’s work will produce further recommendations on the actions that the Government can take, and we await that material with interest.
I have one more question, on the involvement of the voluntary sector and social enterprise. We are depending on the voluntary sector, and seeking to establish more social enterprise companies. What more can be done to encourage interaction between the unemployed and those organisations?
That is an important area in a couple of respects. First, I have made it clear that it is part of the Government’s policy agenda—and my personal ambition—to encourage the growth of a greater social enterprise sector in Scotland. We are now seeing the fruits of the foundation work that we put in place during our first term in office to create the investment vehicles that enable people to commit to a social enterprise, which is welcome.
Secondly, it is important that we broaden the nature of the business base in Scotland so that we have privately owned companies, shareholder companies, mutual companies and co-operatives, and social enterprises into the bargain. The broader the business structures in our economy are, the healthier the economy will be.
The focus of our work on social enterprise takes a number of forms. Some of it involves supporting organisations to expand and take on greater responsibility in the delivery of public services, which is a key part of the public sector reform agenda. It also involves supporting the sustainability of social enterprises so that they are not dependent on grant funding and are essentially earning revenue.
There will be a close relationship between the social enterprise sector and the creation of employment opportunities for individuals with disadvantages. I saw a good example of that in my constituency just a couple of weeks ago. A social enterprise called Giraffe, which already has an excellent cafe in South Street in Perth, has just taken over—rather interestingly—the redundant public toilets at the bus station in Perth, which were unsightly and undesirable, and has created a fantastic cafe. It is creating employment opportunities for young people with vulnerabilities and challenges, and it is a pleasure to see such strong well-founded organisations being able to do that. For those young people, wider mainstream employment opportunities would be pretty much off-limits, but they are able to make an economic contribution through such enterprises. It is excellent to see those successful journeys, and I see such things happening in a variety of areas across the social enterprise sector in Scotland.
Ordinarily, a rise in self-employment would be regarded as a good thing, but evidence to the committee has suggested that the phenomenon of underemployment is a characteristic of self-employment, too. I understand that the committee was not particularly satisfied with the DWP’s evidence on notified vacancies for self-employed posts. What evidence does the Scottish Government have on self-employment and the balance between good and bad, if you like, in that sector?
I cannot quite find the number, so I will correct this later if I do not get it quite right, but my recollection is that the latest figures show that the number of registered businesses in Scotland increased by 9 per cent. I am pretty sure that that is correct, but I will correct that if I need to.
As Joan McAlpine will know, a vast proportion of the business network in Scotland is made up of self-employed individuals, so there must be a rise in their number. Actually, I now see that, as at March 2012, the total number of private enterprises in Scotland was 341,360, which was a rise of 9.9 per cent. The analysis of the figure will show that it includes a large number of self-employed individuals. Inevitably, some of that rise will be a product of the economic difficulties that we have had, the challenges on employment, and people wrestling with the implications of the recession.
We could look at that situation and say that it is all terribly bad news, although I happen to think that we should welcome more people getting into business and creating a platform on which to create a sustainable business and a sustainable living. We would have to explore whether all those business ventures provide economic security and sustainability for individuals. As we all appreciate, establishing and developing a business takes time and a great deal of commitment.
I welcome the trend, as it demonstrates that, in these difficult times, people are turning to enterprise. We should embrace that. There are a number of good examples in the country, such as Entrepreneurial-Spark, which I have mentioned, in which there is a much greater focus on people setting up in business, creating new business ventures and, as a consequence, contributing towards improving the economic health of the country. On the whole, that is a welcome trend.
Does the Scottish Government have sufficient analytical capacity to respond properly to such matters, or are you dependent on London departments feeding you the information, which is perhaps not of sufficiently high quality to allow you to respond in the way that you would like?
The statistics that I quoted are Scottish Government ones. The material that we obtain on the labour market is disaggregated at Scotland level. The statistical base is pretty good in allowing us to consider these questions. Obviously, as time goes on, we will find new questions and issues to explore, so we constantly challenge whether we have the statistical base that can give us all the answers that we require.
Lastly, do you have any evidence from the statistics that employers might be moving people on to self-employed contracts?
10:15
I cannot point to any evidence on that from the statistics. The 9.9 per cent increase in the number of private enterprises in Scotland certainly suggests that more people are involved in or have created such enterprises, and I am sure that some of the implications of changes in employment practice will be fuelling some of those figures.
I suspect that this might be the final question. We have touched only briefly so far on skills and training. From the evidence that we have heard, it seems that where people are underemployed—perhaps working fewer hours or part time when they would rather be working full time—they have an opportunity to increase their skills by accessing part-time courses. However, the number of part-time courses in colleges has been reduced as a consequence of budget cuts. Can more be done to encourage colleges to offer part-time courses to help to fill that gap?
The Government’s approach has focused on shifting the emphasis towards providing more full-time courses in the college sector, because all the evidence tells us that people must be able to access deeper skills training and experience to equip them for entering the labour market.
In response to the convener’s question, I point out the importance of employer involvement. Employers have a responsibility to train and support the development of their staff. Some employers invest heavily in that process, but there are opportunities for that work to be strengthened.
The Government offers flexible training opportunities to support Scottish businesses with 100 or fewer employees to improve their skills-based productivity. About 50 per cent of the training costs—up to a maximum of £500 per employee training session—is available to individual companies, so the Government does its bit, but employers must do their bit too.
I will take a brief supplementary on that point from Rhoda Grant.
Margaret McDougall mentioned someone who had a chemistry degree and was working in a petrol station. In that example, and in some of the cases in the evidence that we received, it may be that the employer will not really buy in to the idea of keeping the employee’s skills up to date, because doing so will not benefit the company. If the employee was employed at the level at which they should be, they would not be working in a petrol station.
It is those people who are underemployed—who are not using the skills that they have—who need to have their skills kept up to date so that they are work ready when jobs become available in an upturn. If they remain being unskilled, they will never reach their full potential and that training will be wasted. How do we get those people into the training and college courses that allow them to continue to work—albeit underemployed—in those jobs while keeping them work ready so that their skills can be fully utilised?
Rhoda Grant says that those individuals are unskilled, but Margaret McDougall’s example involved an individual who had a chemistry degree. In my response to Margaret McDougall, I concentrated on the importance of ensuring that individuals are able to access the credible employment opportunities in the labour market that will arise—
You have misunderstood my question.
Please just hold on for a second. Those opportunities will arise out of improving the economic opportunities that exist in the country. The focus of the Government’s intervention is to support and encourage economic opportunities, which will enable individuals who have already been trained and skilled by the education service to find meaningful employment opportunities.
You have totally misunderstood my question. My question concerned exactly those people who have already been trained and skilled and who are working in a situation where they are not utilising their skills. We need to keep those skills up to date, but the employer will not do that because it will not benefit them.
How do we get colleges to provide the places that allow those people to keep their skills up to date while they are underemployed, so that when they have an opportunity they can take it? If they become unskilled over a period of time, they will not be able to use the skills that they had previously.
The Government provides for individual learning accounts, which enable individuals to take control of those issues for themselves by providing financial support to allow them to develop additional learning opportunities as they see fit. There are a wide range of Government provisions in place to ensure that people can maintain and develop their skills.
Can you remind me what is available as part of an individual learning account?
It is a demand-led source of funding that provides up to £200 per year towards the cost of learning. The funding can be used for a wide range of courses to support individuals to improve their skills and to gain qualifications so that they are better placed to get into or stay in employment.
Do you think that that is an adequate amount of money to keep a chemist skilled while they are working in a petrol station?
In 2011-12 the ILA spend was £10.267 million, and 54,000 people were receiving ILAs, so it is clear that there is a high level of uptake for the services that are provided.
Do you think that it is adequate to provide the chemist with support?
I gently point out to Rhoda Grant that the individual will have already received financial support for higher education. I do not know the details of the example that Margaret McDougall cited—if the gentleman is 26, I am not sure which stage in the education system he would have reached when tuition fees were in place in Scotland. However, now that fees have been abolished, such a person will have had financial support to provide them with higher education.
The Government can provide such financial support, and it provides additional support through individual learning accounts. We can provide only a reasonable range of different opportunities to try to meet the circumstances of individuals, at the same time as trying to create and boost the scale of economic activity in the Scottish economy to meet the expectations and needs of individuals.
In view of the time, we had better call a halt at that point. I thank Mr Swinney and his officials for coming along and helping us with our evidence. That was our final evidence session on underemployment. We will next move on to preparing our report, which I am sure the Scottish Government will be interested in seeing in due course.
10:23
Meeting suspended.
10:27
On resuming—