Employment and Corporate Social Responsibility Inquiry
I welcome the Minister for Enterprise, Transport and Lifelong Learning to the committee. I hope that this evidence-taking session will be an interesting experience for you, minister. We appreciate that you have taken the time to come to the committee. I understand that your tight time scale means that you would like to finish by 4.15 pm. We will do our best to accommodate that request.
Because of organisational difficulties, your statement was issued a little bit late and some members have not had the opportunity to read it. I am happy to give you a few moments to go through it, after which we will move to questions.
Thank you for inviting me to speak to the committee.
We welcome the committee's inquiry into what is an important issue. We will work constructively with the committee in the preparation of its report and beyond. Employment policy is a reserved matter, but we recognise the importance of the European employment strategy to the Scottish economy. Many aspects of the EES are devolved—lifelong learning, employment-related training, business growth, economic development and the promotion of equal opportunities, although not the legislation that pertains to equal opportunities.
Our contribution to the national action plan is brief but important. It sets out the differences between the situation in Scotland and the situation in the United Kingdom as a whole. The other devolved Administrations have taken a similar approach. In previous years, the plan set out adequately Scotland's contribution. In future, I will be content for my officials to liaise with their Whitehall counterparts, with a view to having the plan reflect the situation in Scotland as equitably as possible. Because of Commission-determined guidance on the length and content of national action plans, space is at a premium.
Having a separate Scottish action plan would provide no tangible gains. The important issue is what happens on the ground. I agree with the committee that there is scope to develop more peer review of action plans at different levels of government. However, to work effectively, those must be a means to an end. We must pick up good practice, tailor it to our context and use it to change what we do.
I am positive about the future of the EES. The Commission is right to say that in future the strategy will be more operational. It will change to confront new challenges such as faster economic change, aging populations and enlargement. That is important. Our lifelong learning strategy cuts across some of the current guidelines and will continue to be important in the European context. Today we launched the new lifelong learning strategy for Scotland, which is geared towards helping people to gain new skills and knowledge and is influenced by European Union and Organisation for Economic Co-operation and Development thinking. There is a great deal in the strategy that we can share with our European counterparts; there is also, of course, a great deal that we can learn.
As part of the lifelong learning strategy for Scotland, we will promote increased investment in lifelong learning institutions by continuing to help them to take up European funding and, specifically, to make more use of the European Investment Bank for capital funding. The strategy also sets out objectives for the enterprise networks—to strengthen our skills base and to ensure that Futureskills Scotland and Careers Scotland play an increasingly active role in developing our understanding of labour market requirements.
The context in which we meet has some positive aspects. Currently, employment is at an historically high level and unemployment is at an historically low level. Claimant-count unemployment is at just below 100,000—the lowest figure since 1975. Youth unemployment is 73 per cent lower and long-term unemployment is 71 per cent lower than in 1997. The labour market in Scotland is relatively strong by historical standards. For that reason, the focus of welfare-to-work initiatives increasingly needs to be, and is, on clients for whom there is a specific barrier to entering and remaining in employment. I refer to people on incapacity benefit, other recipients of inactive benefits, lone parents and clients with issues relating to drug and alcohol misuse, sex offending and homelessness.
We must recognise that the economy in Scotland is subject to a degree of uncertainty, given the global economic slow-down. It is important that we remain focused on our employment strategy, which relates to the EES.
I want to mention a couple of initiatives, which we can explore further in questions. Two items are worth mentioning in relation to the pillar on developing entrepreneurship. First, we intend to invest £40 million over the next three years in relation to the "Determined to Succeed: a Review of Enterprise in Education" report. Secondly, we announced today that we would pilot business learning accounts as part of the lifelong learning strategy, to stimulate learning and growth in small businesses.
Projects are also under way in relation to other pillars. As regards active aging, we have been engaged with the Department for Work and Pensions through schemes such as new deal 50-plus. Other examples that are specific to Scotland include training for work, Careers Scotland and modern apprenticeships, for which the upper age limit has been abolished. We have also been involved in the close-the-gap initiative, to bridge the gender pay disparity. That relates to the equal opportunities pillar.
The committee has been discussing corporate social responsibility, which fits well with the agenda on enterprise and employment. The starting point is for businesses to engage with their employees. CSR is certainly good both for Scottish business and for Scottish communities and the Executive has been discussing whether more should be done to promote CSR in Scotland over and above what is done in Whitehall and in Europe. A specific Scottish example is Tesco's work in the St Rollox partnership in Springburn with the council, the Union of Shop, Distributive and Allied Workers and others, which has created more than 500 jobs. Organisations such as Scottish Business in the Community work to facilitate such practical partnerships, making progress locally with the CSR agenda.
Scotland can gain a great deal from socially responsible businesses that are responsive to the public and to those who work for them. CSR can certainly help us to build a successful society with successful business to back that up. We believe that CSR is not an add-on. It is about how companies do their business and how we do our business daily. It will help Scotland to flourish.
As the Minister for Social Justice takes key responsibility and leadership on CSR, the lead official, Kay Barton, is here to help with detailed CSR questions. Kevin Doran is here to help me on employment strategy.
Thank you for those opening remarks, minister. This afternoon, the European Commission identified the lifelong learning strategy as an example of good practice in Scotland that it would like to share with other areas.
I was not aware of that, but I will tell everyone about it.
On a more general point, part of the debate on the development of the EES and the employment guidelines takes place in discussions between member states and the European Union. You mentioned that the Scottish Executive's contribution was brief but important. Looking to the future, how do you envisage Executive involvement in the new strategy?
The agreement to the strategy is among member states and Scotland is not a member state. As for the extent to which the national action plan reflects what is happening in Scotland, I am more than willing to speak to Whitehall to see whether the relevant section can be expanded or can reflect differences and particular examples of good practice. I repeat, however, that restrictions on the length of the document are imposed—not unreasonably—by the Commission.
One of the most important factors is that we have a good relationship between the Scottish Executive and Whitehall at both official and ministerial level. There are very good connections between Scottish Executive and DWP officials and good contacts at ministerial level. Only yesterday, I met the Secretary of State for Work and Pensions, Andrew Smith, to discuss some of the specific initiatives that his department is developing and that fit very well under some of the pillars.
In the end, the most important point is that the strategy has been turned into genuine local action at a local level. There are some good examples of that in Scotland. Our biggest role is to ensure that that happens more often in more places and more effectively, which takes us back to some of the peer-review and benchmarking issues that have been discussed.
How relevant is the European employment strategy to Scotland? How has it helped in the production of Scottish strategies such as the framework for economic development and "A Smart, Successful Scotland"?
The strategy certainly makes a contribution to them. However, I should point out that "A Smart, Successful Scotland" is our economic development strategy. The European employment strategy is far broader than that, and has informed the preparation of both "A Smart, Successful Scotland" and our lifelong learning strategy. The real test of the European strategy's importance to Scotland is the extent to which local partners are using the framework to produce their own plans to deliver services that improve employability and flexibility at a local level. For example, I know that West Lothian Council has given evidence to the committee. In some respects, the council's experience in this issue is more important than mine, and it felt that the strategy had been useful in providing the framework for putting its own action plan in place.
Although you have partly answered this question, I just want to ask whether the European employment strategy gives you the opportunity to discuss policy within Scotland with the UK Government. You have outlined some other mechanisms that you use, such as connections between officials and so on. Do you use any other mechanisms?
To discuss—?
To discuss the European employment strategy and effectively feed into it.
As opposed to feeding into it through Whitehall?
Yes.
No. We make our key contribution through the national action plan. However, as I have said, we have to look in both directions and ensure that local partners are aware of the strategy and the strength that it can give to any local action. One of the key ways in which we do so is through our own welfare to work task force, which develops many such initiatives at a Scottish level.
That leads on to my second question. The Commission feels that the local level has a very important role to play in the European employment strategy. Do you feel that the strategy gives you an opportunity to discuss employment policy within Scotland? What role does the local level play in the strategy's development?
The key to that question is the extent to which some of the key partners, including UK partners, are prepared to be flexible in responding to and supporting suggestions or plans that are specific to the Scottish case. As far as the employment strategy is concerned, our experience has been good, but not necessarily perfect. For example, the welfare to work task force has very much focused on Glasgow as a part of Scotland that has particular employment problems and needs. I think that the chair of that group, John Milligan, would say that it received a great deal of support from the DWP and Jobcentre Plus for its ideas, and that it has been able to feed the ideas back in as best practice.
However, in the current labour market circumstances much of our employment initiative is based around the groups that face particular barriers in getting to the labour market. We identified flexibilities in a couple of areas that would be helpful in moving people from, for example, homelessness or drug rehabilitation programmes into work. Such flexibility has not always been available. That was one of the topics of conversation with Andrew Smith yesterday. There are opportunities and we have had success, but sometimes we could do more.
Would you encourage other structures in Scotland—for example, non-governmental organisations such as Fairbridge, which moves people from homelessness and drugs misuse into work—to become involved in feeding into Whitehall policy, as a part of your strategy to develop, at least, the discussions?
Yes, we would. Many such social partners are either Scottish partners of similar organisations in other parts of the UK, or the Scottish sections of UK-wide bodies. We would encourage them to feed in at all levels the kind of experiences to which you referred.
Can you give us a bit more detail about the role played by the Scottish Executive in the production of the current national action plan? You referred to a meeting that you had yesterday with Andrew Smith. Were there similar meetings at ministerial level before the nation action plan was drawn up? If not, were the meetings at the level of officials, or was the work done mainly by correspondence?
I think that the bulk of the on-going work is done through contact between officials. I used the example of yesterday's meeting to demonstrate that ministerial contact backed up contact between officials. However, I will ask Kevin Doran to say something about that because he will have been involved directly in the kind of work that you asked about.
Kevin Doran (Scottish Executive Enterprise and Lifelong Learning Department):
The first draft of the plan, including the input from the devolved Administrations, is prepared by officials in Whitehall. Officials from the devolved Administrations are involved in that. The minister is responsible for approving the Executive's input into the plan at that stage. We are also able to comment on the full document before it is finalised. In 2001, we consulted on our input into the plan, but we did not get a great response. The only response was from COSLA. Most of the detailed work takes place between officials and, historically, we have consulted other partners to get their input into that.
So there were no meetings at ministerial level at all.
Off the top of my head, I could not tell you. I would have to check records and diaries.
Minister, I think that you indicated in your preliminary remarks that you were not in favour of a separate Scottish national action plan. Why not? How could the Scottish Executive's role in drawing up or having input into the UK national action plan be improved?
To answer the second part of the question first, it seems to me that scope for improvement could come from lengthier reflection on the distinctive approaches that we might take in Scotland—although that might be limited by the space that we have available. However, I might be willing to pursue such an approach.
On a separate Scottish action plan, my question, which is rhetorical rather than particularly for Mr Canavan, is, what would be the additionality of such an action plan? What would such a plan bring to those who look to the agencies that we are talking about to support them, improve their employability and find their way back to the labour market? I am not sure that a Scottish action plan would produce much more.
What is more definitive of the support's effectiveness is the effectiveness of the local action plan and the extent to which local partners work together. It is right that we concentrate our attention to ensure that that is delivered properly and consistently. For example, in response to the "Renewing Local Democracy: The Next Steps" white paper, we will establish an improvement service to support local authorities in service delivery. That could produce a genuine and effective improvement in those parts of Scotland in which best practice in support for employment is perhaps not being followed. We must consider where we focus our attention so that we can have the most effective impact on those who look to us for those services.
I would like to pick up on Kevin Doran's point about the lack of responses to the consultation in 2001. Clearly, it is not satisfactory that there was only one response. Do you plan to improve on that?
We would need to look again at the arrangements of our five-year planning process to see whether we could stimulate more involvement in consultation. We want to encourage that.
In his submission, the minister talked about the close the gap campaign that was initiated in March 2001 to raise awareness of the gender gap in Scotland. The joint employment report points out that the gender pay gap is "unacceptably high" in the UK and that there is a higher pay gap in Scotland than in many parts of the UK. How is the Executive tackling that? The Equal Opportunities Commission Scotland gave evidence during this inquiry about compulsory pay audits. Is the Executive considering examining that sort of method to raise awareness as well as to focus employers' minds on gender and pay?
Equal pay reviews or audits would have to be compulsory if they were to be fully effective. However, they are reserved matters. Therefore Westminster would have to pursue such a policy. We are working, particularly through the close the gap campaign, to make it easier for willing employers to carry out pay audits that promote the use of the Equal Opportunities Commission's equal pay toolkit. The Executive is also working with, for example, trade unions in their work to highlight equal pay and make it a priority. We are also slipping back to one of the other pillars of the European employment strategy in working through Scottish Enterprise to encourage women in business. The enterprise networks have an objective in their business start-up target for businesses that are led by women. I know that that is not quite the same as pay, but it is about earning power and trying to redress what the statistics clearly tell us is an unacceptable imbalance.
As the Executive has done that as an organisation, will going through that process raise the awareness of other employers? I take your point about the Executive being able to promote equal opportunities rather than having the power to legislate on equal pay. The Executive can clearly further encourage employers in Scotland. Representatives from the European Commission talked earlier about considering producing a CSR report next year.
We are doing our equal pay audit not only because it is the right thing to do but with a view to showing leadership. We will tell other employers that we have done that and encourage them to follow our lead. We will press particularly hard on the public sector, partly because that is easier to do.
I will move on to one of the other issues that were picked up in the joint employment report, which states:
"The continuing rise in numbers claiming Sickness and Disability Benefit represent a potential constraint to further increases in labour supply."
Scottish Enterprise raised that issue with us in our inquiry. It calculated that there were around 87,000 inactive people in the labour market. Recent press articles have put the figure even higher. How does the Executive intend to address that issue?
We intend to do that in co-operation and co-ordination with the DWP, which is also concerned about those levels of inactivity. It has a project called pathways to work, which is aimed specifically at those who are in the situation that you describe and would like to move back into the labour market. It involves some of the flexibility on maintaining benefits that I mentioned tangentially in reply to Mr Quinan's question, so that any question of moving into work and being worse off is dealt with.
There are six pilots throughout the United Kingdom, one of which will take place in Renfrewshire. It will obviously be monitored, and, if it proves successful, we expect it to be rolled out. If the project is going to work, it must be implemented in partnership by some agencies that operate in reserved areas and some that operate in devolved areas. That was part of the discussion yesterday with my Whitehall colleague. We made clear that, in health and community care, we are moving towards a single assessment that includes an employability element and that it was extremely important that that was taken account of in building the relationship between the different partners in the Scottish pilot. I expect that pilot project to begin later this year.
Colin Campbell has a question about active aging. I am sure that it is a coincidence that he always takes the questions on aging.
How did you know that I was going to ask the question on aging first and not second? All right—I will ask about active aging.
It is interesting that Sarah Boyack has spoken about extending the number of those available for work and about equal opportunities. I noted when I looked at the equal opportunities question that it was about the gender gap and that no mention was made of what might be called active aging policies, which sounds like a contradiction in terms. How is the Executive developing policies in that area?
Two key projects are under way. One has been under way for some time and one for not quite so long. I will also mention a third.
The key instrument is the new deal for the over-50s. That is extremely important. With our demographic trends, it would be foolish not to consider it important. It is a direct instrument for helping the over-50s to find their way back into the labour market. We have also supported the UK-wide active aging campaign which, at its core, is about convincing employers that the over-50s are a potential source of highly developed skills and experience on which they would be foolish to turn their backs. In broader terms, we are engaged in the better government for older people project, which considers active aging as one of its aspects. However, the key policy instrument is the new deal for the over-50s.
In my view, we will have to develop the area further in future because the demographic trends will demand it. The lifelong learning strategy, which was launched today, acknowledges that, if lifelong learning is to be lifelong, it must clearly be for older Scots as well as younger Scots. The strategy contains a number of suggestions that will, I hope, help to improve access to learning and upskilling or retraining for older Scots to extend their employability.
I have another brief question. Research shows that 80 per cent of the work force in 2010 is already in employment.
Correct.
Key to making the work force adaptable is for employers to believe that certain things have to be done and for them to subscribe to doing them. How will you persuade employers, especially those in the small to medium-sized enterprise sector, to invest time and energy in retraining people and in enabling people to adapt to change?
Not only is it the case that the statistic that Mr Campbell quotes is correct, but it is also the case that Futureskills Scotland, in the biggest labour market survey that has been undertaken in Scotland, identified skills gaps as opposed to skills shortages as being a much larger problem for Scotland. The gap that was identified was in the skills of those who are already in the work force—the argument is once again going in exactly the same direction.
We have to do as much as we can to persuade employers that investing in skills and training is to their business benefit. In terms of the lifelong learning strategy, we recognise that we have to support employers to make the investment and allow time off for their employees. That is the purpose of the business learning accounts, which we will look to support in respect of the small to medium employers for whom the impact of time off for training is markedly more difficult to deal with. We still have some work to do on the detail of the operation of the business learning accounts. I hope to be able to provide that detail over the next few weeks. I would have liked to have been able to do so today, but things did not quite work out that way. There is still some work to be done, but we have to look at ways of supporting employers.
I recognise that we are just about out of time, but I would like to cover a couple of loose ends if I may.
Sure.
The first question returns us to the national action plan. I would like to tie up that issue with a comment from you on the plan. In Scottish Enterprise's submission to the committee, it stated:
"the current summary of the Scottish contribution contained in the National Action Plan underplays, and in places, misrepresents, the actual contribution from Scotland to the aims of the UK plan and therefore the EU Employment Strategy."
How do you feel about that?
I also have another quick question about CSR. We recognise that your statement to the committee included a contribution on that subject. I am sure, however, that you will agree that an element of the principle of CSR is the mechanisms that organisations use to consult and relate to their employees. We asked the European Commission about that this afternoon. We mentioned the experiences in Scotland in relation to Boots and Motorola. Given that the European Committee has strongly supported the full implementation of the information and consultation directive, would you like to make known your views on the subject?
In answer to the latter question, we expect employers to be transparent in their dealings with their work force. In the case of Boots, I made it clear last week that I was extremely disappointed that the decision about the review emerged so late in the day. Although it might have been the case that some of the work force had had concerns during the course of the review, it was not the case that they were led to believe in any formal sense that the outcome would be as it was. I think that we made it very clear that the situation was very unsatisfactory.
I have forgotten the first question.
It was about Scottish Enterprise's comments on the national action plan.
The question of the scope of the contribution might just come down to the lack of available space in the national action plan. As I have said, we are willing to make that point and look for more space, although the Commission limits the available space.
I would have to know what Scottish Enterprise meant when it said that the contribution had been misrepresented before I respond on that issue, but I am willing to contact Scottish Enterprise to ask for clarification. We would not want to see such a situation and we would try to redress it.
I realise that we are running about five minutes late. We appreciate the minister's attendance, which has helped us to tie up our inquiry. This is the final evidence-taking session and, I must say, it has been a long haul. All we have to do now is agree to the report at the next meeting. I do not envy our adviser, Jon Jordan, who will put the report together during the next few weeks. I thank the minister and his officials for attending.