Making work pay - a roundtable discussion on fair work

The aim of the Scottish Government’s economic strategy for the country is to build a more cohesive and resilient economy which improves the opportunities, life chances and wellbeing of every citizen in Scotland. At the heart of this ethos is the principle of fair, sustainable work, which government has been developing in consultation with industry, trade unions, and third sector representatives. 

Key actors from these discussions were present at Holyrood’s recent roundtable event in association with the Joseph Rowntree Foundation and the Resolution Foundation at the SNP conference to contemplate what this ‘fair work future’ might look like.

Eighty one per cent of the Scottish workforce are already earning the living wage or higher, said Cabinet Secretary for Fair Work, Skills and Training, Roseanna Cunningham, but the Scottish Government’s scheme of accreditation as ‘living wage employers’ turned companies into exemplars for others via a ‘Business Pledge’.

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“What we’re trying to do is change a culture, a very embedded culture, and we know when you try to change culture, you don’t do that overnight. We accept that. Because we don’t have practical powers in terms of the employment law you would normally look to first, we’ve had to find a way around that,” she said.

The Scottish Government had put economic growth and productivity “on the same level” as tackling inequality, she added. She acknowledged that fair work is about more than pay, a point raised by the Poverty Alliance’s Peter Kelly and others, but said it provided a litmus test. 

“We’ve put the living wage at the heart of it because it is still fundamental. Money isn’t everything. I don’t know that it makes the world go round as the song said, but by god, if you don’t have enough of it your life is really difficult. And there are far too many people out there still at the moment who don’t have enough of it, and it affects every part of their life, including their mental and physical health.”

Figures collated by NHS Health Scotland have suggested the most important method of alleviating ill health in Scotland is to put more money in people’s pockets, she said. The Fair Work Convention brings together business and trade union leaders to have a wider discussion on making work fairer, and will publish its first report in March next year.

Julia Unwin, chief executive of the Joseph Rowntree Foundation (JRF), said the way Scotland had grasped the agenda was significant. “What I applaud is how Scotland has grasped it as a totality, not just a set of separate issues,” she said.

Unwin describes in-work poverty, which has grown since the last recession, as “a breach of the social contract”, where people can work full time and still be unable to support their family.
What has been more surprising, she said, was how flexibility in the new economic models has hit people’s progression in work. 

“Flexibility is always thought of as something good at the top end of the labour market, but all of our research from the last ten years shows people are going in and out of work, but never out of poverty.” 

JRF research has revealed four in five people starting a low paid job are still low paid two years later. “People are starting poor and staying poor, and I think it’s important we address that,” said Unwin.

Retail, hospitality and care are sectors where low and unreliable pay is “locked in”, she said, but they are also “pillars of the economy” which can’t be outsourced offshore.
“If our return to growth is locking in low pay it’s not a sustainable or resilient growth. In fact, it’s a very fragile economy, because at any locality or city region if you’re depending your growth on very low paid work you have no money in the economy, when it’s the circulation of money that keeps the economy going. It’s extremely risky and vulnerable.”

Economic think-tank the Resolution Foundation is due to publish its first Scottish-specific paper, looking at how the country compares to the rest of the UK. Chief economist Matthew Whittaker said the UK Government’s approach, raising the wage floor and asking business to pull more weight, “just doesn’t work”.

“While there’s a very clear moral case for fair work and good work, there’s also a very clear economic case. That’s really the argument we want to push, particularly in Westminster, pointing to Scotland as a way this can be advanced,” he said.

UK Chancellor George Osborne has targeted two million more in work by the end of the parliament, and Whittaker said he would only achieve it by reaching out to groups furthest from the job market, such as single parents, people with low skills and those with disabilities and long-term conditions.

However, these groups have needed legislative support and incentives like tax credits to enter work in the past, he pointed out.

“I think if there is a genuine desire to boost employment and have businesses work with government in order to help people work their way out of poverty, we need to take a more holistic approach and I think that’s why the agenda in Scotland is so important. I genuinely hope the Chancellor does what he’s being doing a lot of recently, and that is to steal some policies from Scotland.”

STUC leader Grahame Smith said it felt like “the end of a very long beginning” with “huge momentum” arising from the 2014 Working Together review, chaired by Jim Mather.
“Government has an important role to play, but this really needs leadership from the employers and unions,” said Smith, which is why the Fair Work Convention was established. 

He said the convention was currently consulting on what fair work might look like around five themes: opportunity, diversity, fulfilment, security and having an effective voice about how the job is designed. Having unions, employers and an academic in a room discussing it wouldn’t be enough, he said, “this has to be about building a movement”. 

The STUC is also an employer. “We employ 40 people, so I understand a wee bit about running a small business. I wouldn’t say we’re typical, but I understand some of the challenges and they are real, and we need to recognise that,” he said.

But while effort has been made to build a dialogue with employers in Scotland, chair Mandy Rhodes pointed out they would need to be supported to develop new business models which allowed for higher staff costs. Julia Unwin said the JRF itself had learned from becoming an early adopter of the living wage in the care sector, leading to better retention of staff and a reduction in sick leave. 

There is a “compelling business case” for having better relationships with staff, she said.

Peter Kelly said he had found from discussion on the living wage with small businesses that most employers want to pay it, but needed to be supported to do it, especially if they have an already established business model. “I think employer support is absolutely critical. That might sound unusual for someone from an anti-poverty organisation, but I think we do,” he said.
Cunningham said her portfolio – created only a year ago – increasingly led to her consulting with cabinet colleagues. 

“It grows and grows, to the extent now I genuinely think we’re just scratching the surface. I’m in a job that’s been in existence for only a year, and I feel as if we’re only really just beginning to understand what it actually means.”

She said she wanted to maintain dialogue with employers who would like to introduce the living wage but weren’t yet in a position to do it, to look at other options for their workforce.

“I visited a factory in Lanarkshire where I guessed they weren’t paying the living wage, because if they were they would have told me, but the floor manager had worked out a shift pattern which meant every single person working in that factory got a four-day weekend every second weekend. That doesn’t mean they paid the living wage, but they still put in place a flexibility in their work pattern which would have made the jobs very attractive.”

Very small businesses could learn from each other, she suggested, conceding more could be done to advise them.

Colin Borland, head of public affairs at the Federation of Small Businesses Scotland, said the economic model which has prevailed for 30 years has presented a series of obstacles for the agenda. Global competition, technological advances and the free movement of labour had changed the workplace, he pointed out.

“If we’re going to ask ourselves ‘what does a good job look like?’, ‘what does a good employer look like?’, we can’t just rely on crude tick-boxes about what the wage level’s like, what the pension level’s like,” he said.

Business confidence had “plummeted” in the wake of the Chancellor’s announcement on the “national living wage”, Borland warned.

Scotland had fared badly, he suggested, because of its reliance on industries where customers buy largely on price. He cited an email from the Premier Inn hotel chain offering a room for £30 a night. “Is the era of cheap stuff coming to an end? And is that something politically desirable?” he asked, adding the system where taxpayers subsidise low pay by big companies is not sustainable.

“If we are going to tackle low pay, we do need to look at the economics at play in those sectors and start to say if we’re prioritising this then we’re going to have to put our money where our mouth is,” he said. 

Hannah Bardell MP said her recent experience working in the oil and gas industry had revealed some reluctance at “being told what to do” by government. “I saw a lot of tokenistic giving back in the oil industry, but also a lot of companies who genuinely wanted to get their staff involved in society,” she said.

JRF’s associate director for Scotland, Jim McCormick, said people working in anti-social hours wasn’t necessarily unjust in itself, but “what is unjust is that people get trapped in those jobs without at least the opportunity to get out, or within those jobs, advance”.

Current work can be so flexible  for employers it can lead to breaches in employment law, he warned, and “as a minimum”, Scotland should uphold the laws more effectively.
Inequality of opportunity is prevalent among minority ethnic groups, according to McCormick. “We should be alarmed at how performance in terms of education does not translate into progress in the jobs market,” he said.

Inequalities are set to get worse once planned changes to tax credits take hold, according to Russell Gunson, the new director of the Institute of Public Policy Research Scotland.
“There’s 800,000 households that’ll be worse off because of the tax credit changes up here, but within that the effects aren’t even. Lone parents, for example, are being clobbered by that, by over £1500 per year, on average. And children more generally,” he said.

Calibrating the skills agenda to the needs of fair work would help, he suggested.

The JRF’s Katie Schmuecker said the conversation about workforce development must include both supply and demand. “Scotland will be getting the Work Programme soon, you already have a lot of control over skills budgets, and certainly what our research shows is we can refocus employability programmes so they are gearing people not just towards employment but actually to earnings progression once they’re in employment,” she said.

Oxfam is currently undertaking some participatory research on what makes decent work, said the charity’s policy and research adviser, Francis Stuart. After three focus groups, no one identified promotion opportunities as important. “I think somehow we need to rethink progression so it’s less about making an individual step up a ladder,” he suggested. 

With Scotland’s population ageing, many employees are also having to care for family members at home, SCVO’s Jenny Bloomfield warned.

“All the talk we’ve had around wages and working with employers, there’s also working with employees to help them cope with those outside pressures and to make sure they can support their families while also staying in employment,” she said.

SCDI chief executive Ross Martin said the narrow focus of the living wage can become a distraction from a much-needed discussion about values.

“The business pledge, by its nature, is a tick-box exercise. It would be more useful to have a conversation about values because it creates a much bigger common platform around which other people can gather,” he said. 

Oil and gas had begun to shift towards a more collaborative way of working in the wake of the drop in oil price, “something they’ve not always been great at”, he said, but it could be replicated in other sectors. 

“If you take the sectors we were talking about – care, retail, the visitor economy or agriculture – it needs to be a whole sector approach because the point that Colin made was the economic system is designed around competition rather than collaboration. If you’ve got that as the driver, if the regulatory regime, the policy regime is driving you towards competition, how can you possibly expect people to collaborate on an issue like this?”

Christina McKelvie MSP said the opportunity to design a new employability programme in Scotland would be difficult while access to work is not going to be devolved.

Roseanna Cunningham agreed it was hard to see how things like the relationship with the Department for Work and Pensions would develop after new powers are devolved, and George Osborne’s recently announced levy on apprenticeships “changes the entire basis” of the skills agenda. 

She concluded by saying the problems should be viewed as opportunities. “If we identify a problem, let’s think of that as an opportunity and try to work towards solutions, rather than run the risk of seeing an obstacle that can’t be overcome. It may be a challenge, but that doesn’t mean it can’t be overcome.”