Executive Summary
The Fair Work Convention, established in 2015, is an independent body with a remit to advise Scottish Ministers and advocate and promote fair work in Scotland. Within the Fair Work Framework (2016), the Fair Work Convention set out a vision that “by 2025, people in Scotland will have a world-leading working life where fair work drives success, wellbeing and prosperity for individuals, businesses, organisations and society”. The Scottish Government shares this vision as set out, for example, in the Scottish Government’s Programme for Government for 2022/23,[1] which makes it clear that becoming a ‘leading Fair Work Nation by 2025’ remains a key commitment of the Scottish Government. The Fair Work Convention developed a Fair Work Measurement Framework to track progress in Scotland against the five dimensions of fair work (effective voice, security, respect, opportunity and fulfilment). This is outlined in the Fair Work Convention’s 2020 ‘Fair Work in Scotland’ report.[2]
The Fair Work Convention commissioned Alma Economics to carry out research to support tracking Scotland’s progress in the dimensions of Fair Work. To complete this research, we (i) updated the Fair Work Measurement Framework with the latest available data, (ii) conducted a wide review of key data sources to address evidence gaps, (iii) developed a new International Fair Work Nation Framework and benchmarked Scotland’s performance on a list of critical indicators of Fair Work against a carefully selected group of comparator countries who share similar characteristics to Scotland and determine what constitutes internationally ‘leading’ performance in Fair Work, and (iv) carried out a rapid literature review to explore policies that act as facilitators of success in countries that demonstrate leading performance in Fair Work.
Update of the Fair Work Measurement Framework
We have updated the indicators in the Fair Work Measurement Framework using the latest data available for Scotland.[3] Here we outline the key findings across the five dimensions of Fair Work.
Opportunity: Indicators under the opportunity dimension have improved overall since 2016, with four out of five indicators showing improvement in 2021 compared to 2016. Between 2016-2021 the youth unemployment rate fluctuated significantly between 8.3%-13.2% and was 10.2% in 2021. Finally, one additional indicator, used to cover evidence gaps in the 2020 Fair Work report, was incorporated into the Opportunity dimension to capture the portion of workers who feel that their job offers good opportunities for career progression, which was 53.5% in 2021.[4]
Respect: Performance in the respect dimension is mixed. Out of eight indicators, four worsened, three improved, and one indicator remained broadly stable between 2016-2021. The incidence of stress, anxiety and depression caused by or made worse by work, as well as work-related ill health and disease, increased, while the incidence of workplace injuries decreased over the same period. This period coincided with the Covid-19 pandemic in 2020 and 2021. Over the same period, the average estimated working days lost due to work-related injuries and stress, anxiety and depression increased compared to 2016, but the average estimated working days lost due to ill health and disease decreased. The number of fatal injuries was the same in 2021 as in 2016. Finally, three additional Respect indicators were added beyond those included in the 2020 Fair Work report related to discrimination, bullying and harassment. Two of these indicators (the percentage of workers reporting that colleagues were rejected for being different and the percentage of workers who felt that their managers would hold a mistake against them) improved between 2020 and 2022, while an indicator on the percentage of workers that reported experiencing discrimination was at 7% in 2022.[5]
Security: Most indicators in the security dimension of the Fair Work Framework have either improved or maintained similar values between 2016 and 2021. Overall, six indicators improved, four fluctuated, one remained broadly stable, and three worsened. The three areas where performance worsened were: (i) hours of unpaid overtime, with workers who reported working unpaid overtime doing on average thirty more minutes of unpaid overtime per week in 2021 compared to 2016, (ii) the disability pay gap, which widened to 18.5%, and (iii) the proportion of workers in zero-hours contracts which was 3.4% in the last quarter of 2022, compared to 2.2% in the same quarter of 2016.
Fulfilment: Indicators related to fulfilment broadly improved in 2021 compared to their 2016 values. Three indicators improved, one worsened, and finally, one fluctuated around its 2016 levels. The proportion of workers who reported completing work-related training in the last three months increased from 23.1% in 2016 to 23.9% in 2021. However, at the same time, the proportion of employers offering training to workers decreased to 70% in 2021, compared to 73% in 2017. Overall, the indicators of this dimension showed moderate positive movement. The proportion of employers reporting at least one skill shortage vacancy dropped to 5% in 2020 compared to 6% in 2018, and the proportion of workers who were overqualified for their current role, according to their employer, was 33% in 2020 compared to 35% in 2018. Two new indicators were added to the Fair Work Measurement Framework relating to work intensity and problem solving. A composite index of four questions related to worker autonomy and influence over work was added. The indicators for work intensity and problem solving remained broadly stable between 2020 and 2022, while the composite index for autonomy and influence improved over the same period.
Effective Voice: Effective voice indicators of Fair Work fluctuated around their 2016 levels throughout the period under consideration, with the indicator on self-reported collective bargaining showing a slight improvement and the indicator on trade union membership worsening in the same period. Finally, to reflect on whether workers feel they have adequate channels to communicate, influence, and negotiate with their employer, we added an indicator from the Working Lives Scotland (WLS) survey that captures the percentage of workers who feel they have no voice channel at their work. The ‘employee voice’ indicator remained broadly stable between 2020 and 2022 at 19%.
Evidence gaps and alternative measures
We also explored various newer data sources to address eight evidence gaps identified in the 2020 Fair Work in Scotland report.5F5F[6] For this part of the research, we carried out a targeted data review of sources such as the Annual Population Survey Job Quality indicators,[7] the UK Household Longitudinal Survey (Understanding Society),[8] and the WLS survey.[9] The updated Fair Work Measurement Framework includes additional measures for six out of the eight indicators missing in the 2020 Fair Work in Scotland report. Evidence remains lacking for the following two areas of interest: (i) sick pay entitlement and (ii) enforcement, including inspections. Finally, in light of a shift to different working arrangements and the rise of home working after the Covid-19 pandemic, we recommend the incorporation of an additional measure of flexible work to capture the incidence of home working arrangements in Scotland.
International Fair Work Nation Framework
Developing the International Fair Work Nation Framework consisted of two stages: (i) selecting a list of suitable comparator countries and (ii) selecting a short-list of indicators from the Fair Work Measurement Framework to be included in the International Framework. To identify a list of suitable comparator countries, our team considered: (i) similarity to Scotland based on economic trends and outcomes, and labour market conditions and institutions, (ii) data availability, and (iii) extent of control over key policy levers. The comparator countries included in the International Fair Work Nation Framework are: Austria, Belgium, Denmark, Finland, the Netherlands, Iceland, Ireland, and England. Finally, our data review allowed us to select 14 indicators from the Fair Work Measurement Framework, to include in the International Framework.
The table below presents the overall results of the benchmarking exercise for each indicator included under each of the dimensions of Fair Work. The “leading performance” of Fair Work is defined as the performance achieved by the country that leads the relevant sub-measure among the comparator countries in the International Framework. The Framework serves as a benchmark for Scotland, indicating a potentially achievable level of performance in the future, although Scotland’s institutional and labour market characteristics may result in different absolute values in each measure. The Framework helps determine the scale of Scotland’s ambition to become a Fair Work nation, with different goals depending on the measure and the country’s relative performance compared to the leading countries in each area.
Out of the fifteen indicators selected to be included in the International Fair Work Nation Framework, Scotland is leading the comparator countries in one (permanent employment), while it has the second-best performance in two more indicators (youth unemployment rate, work-related ill health and disease).
The countries with the most first places are the Netherlands and Austria, each leading in three indicators. Following closely behind, Ireland, and Finland lead in two measures each. Finally, the remaining countries in the Framework, Iceland, Belgium, and Denmark, except for England, each lead in one indicator.
Cross-country comparisons across all indicators included in the International Framework are also depicted in the heatmap below. The heatmap adopts a Red-Amber-Green (RAG) traffic light system to clearly present for each indicator of Fair Work, how each country performs, and how countries perform overall across all indicators. The colour scale ranges from dark green for leading performance to red for the performance observed in the last placed country in each indicator. The varying shades of light green to dark amber depend on each country’s figure distance from the maximum or minimum performance. The table also summarises each country’s average ranking across indicators.
As can be seen in both the table and heatmap below, a unitary definition of a “leading fair work nation” would not be possible, as different comparator countries do better and worse in different areas of Fair Work. No country performs well on every indicator.
| Dimension | Indicator | Leading country | Scotland’s position | Gap to leading country[10] |
|---|---|---|---|---|
| Opportunity | Disability employment gap | Denmark (7.9 p.p.) | 6th out of 8 (31.2 p.p.) | 23.3 p.p. |
| Gender economic inactivity gap | Finland (3.1 p.p.) | 4th out of 9 (6.2 p.p.) | 3.1 p.p. | |
| Youth unemployment rate | The Netherlands (9.3%) | 2nd out of 9 (10.2%) | 0.9 p.p. | |
| Respect | Workplace non-fatal injuries | Ireland (526.3 per 100,000 workers) | 5th out of 9(1630 per 100,000 workers) | 1103.7per 100,000 workers |
| Work-related ill health and disease | Ireland (3.1%) | 2nd out of 9(4.9%) | 1.8 p.p. | |
| Security | Gender pay gap | Belgium (5.0%) | 4th out of 9[11](11.6%) | 6.6 p.p. |
| Underemployment | Austria (3.5%) | 6th out of 9(6.3%) | 2.8 p.p. | |
| Permanent employment | Scotland (95%) | 1st out of 9 | - | |
| Involuntary non-permanent work | Austria (3.7%) | 7th out of 9[12](28.7%) | 25 p.p. | |
| Involuntary part-time work | Netherlands (3.7%) | 6th out of 9(13.7%) | 10 p.p. | |
| Low pay | Netherlands (6.5%) | 5th[13] out of 8[14](9.6%) | 3.1 p.p. | |
| Fulfilment | Skills underutilisation | Finland (8.4%) | 8th out of 8(29%) | 20.6 p.p. |
| Effective Voice | Trade Union membership | Iceland (91.4%) | 5th out of 9(29.3%) | 62.1 p.p. |
| Collective bargaining | Austria (98%) | 7th out of 9[15](38.1%) | 59.9 p.p. |
| Scotland | Austria | Belgium | Denmark | England | Finland | Iceland | Ireland | Netherlands | |
|---|---|---|---|---|---|---|---|---|---|
| Disability Employment Gap | 31.2 | 26.3 | 38 | 7.9 | 25 | 22.2 | No data | 41.3 | 25.8 |
| Gender economic inactivity gap | 6.2 | 8.6 | 8 | 6 | 7.3 | 3.1 | 5.5 | 9.5 | 6.9 |
| Youth unemployment rate | 10.2% | 12.0% | 18.2% | 10.8% | 12.8% | 17.1% | 12.0% | 14.5% | 9.3% |
| Workplace non-fatal injuries | 1630 | 1416.5 | 2234.9 | 2565.2 | 1800 | 4025.1 | 553.1 | 526.3 | 997.1 |
| Work-related ill health and disease | 4.9% | 13.2% | 9.5% | 9.0% | 5.1% | 25.7% | 9.4% | 3.1% | 7.4% |
| Gender pay gap[16] | 11.6% | 18.8% | 5.0% | 14.2% | 16.2% | 16.5% | 10.4% | 9.9% | 13.5% |
| Underemployment | 6.3% | 3.5% | 6.0% | 3.9% | 7.3% | 6.7% | 3.8% | 5.8% | 7.2% |
| Permanent employment | 95.0% | 91.0% | 89.7% | 89.1% | 94.4% | 83.7% | 83.8% | 89.6% | 71.8% |
| Involuntary non-permanent work[17] | 28.7% | 3.7% | 29.8% | 16.8% | 28.9% | 25.0% | 7.6% | 17.2% | 15.8% |
| Involuntary part-time work | 13.7% | 9.2% | 21.4% | 9.3% | 11.8% | 31.6% | 15.4% | 12.6% | 3.7% |
| Low pay | 9.6% | 14.7% | 11.5% | 8.7% | No data | 8.6% | 7.6% | 18.0% | 6.5% |
| Skills underutilisation - overqualification[18][19] | 29.0% | 20.0% | 10.8% | 17.1% | No data | 8.4% | 23.2% | 10.6% | 15.0% |
| Trade union membership | 29.3% | 26.2% | 49.1% | 67.0% | 22.1% | 58.8% | 91.4% | 24.9% | 15.4% |
| Collective bargaining[20] | 38.1% | 98.0% | 96.0% | 80.3% | 24.8% | 89.2% | 90.0% | 34.0% | 75.6% |
| Average ranking | 4.9 | 4.6 | 5.6 | 4.1 | 5.9 | 5.6 | 3.7 | 5.1 | 4.5 |
Note: This heatmap presents the relative performance in the Fair Work indicators using varying shades of blue, from white (indicating the lowest performance) to dark blue (representing leading performance). Grey cells signify a lack of data. The table also includes a row that presents each country’s average ranking across indicators. (please see PDF for colour reference)
Lessons learnt and the way forward
As the final stage of our research, we carried out a targeted rapid evidence review to discern key features of the policy and labour market landscape of the ‘leading’ country in each measure that may act as facilitators of success. Our research focused on policy related to indicators on the International Framework for which Scotland is considerably behind the ‘leading country’. Policies and best practices identified in this report could be utilised as a starting point for future research related to progress in Fair Work in Scotland. Policy measures in the following areas were identified through our evidence review:
- Active labour market policy (ALMP): ALMP schemes can include a range and/or combinations of measures such as: workforce training, job search assistance, job creation, and various subsidies. Denmark and the Netherlands are examples of countries that have made significant use of ALMP policies. Different types of ALMP measures can support improvements in indicators such as involuntary part-time work and involuntary non-permanent work, worker underemployment, skills underutilisation, and the disability employment gap.
- Policies supporting families with young children: Key policies in this area include (i) improving access to childcare at an earlier age and at affordable rates, and (ii) providing substantial paid parental leave for both parents. Research shows that women’s economic participation is disproportionally affected by family duties compared to men. Increasing the accessibility of childcare for young children can reduce the hours spent looking after family. Furthermore, offering substantial paid parental leave to both partners can reduce the negative labour market impacts of prolonged leave currently predominantly faced by women. Finland offers affordable childcare to all children after the age of nine months and a total of 320 working days of parental leave, equally split between parents.
- Policies promoting health, safety, and well-being in the workplace: In 2019, the United Kingdom led in terms of the rate of establishments with an action plan to reduce worker stress levels. Areas for improvement include providing clear guidance to workers in relation to health and safety best practices in the workplace, as well as continued improvement in collecting data on the incidence and outcomes of workplace inspections by government authorities.
- Policies to promote gender parity in pay: As legislative powers on equality policy are reserved to the UK Government, our review focused on policies that can be implemented through devolved powers. Policies in place in the leading countries in terms of gender pay equality include (i) policies to promote transparent firm-level policies relating to remuneration to ensure remuneration policies are gender-neutral, (ii) actively supporting the improvement of employee appraisal practices through schemes such as government-offered training to ensure job evaluation practices are gender neutral and do not promote unfair discrimination of female workers, and (iii) promoting the adoption of gender neutrality action plans by businesses. Finally, exploring further the recommendations of research undertaken in the past by the Scottish Government on policies and best practice for valuing women’s work.[21]
- Trade union membership and collective bargaining: In the absence of full legislative and policy-making powers, the Scottish Government is placing a clear emphasis on achieving Fair Work in Scotland through wide engagement with various relevant stakeholders, including employers and trade unions. As outlined in recent Scottish Government Fair Work action plans, promoting increased trade union membership and higher incidence of sectoral collective agreements is a key area of interest of the Scottish Government.
Conclusion
This report presents two frameworks for assessing: (i) Scotland’s progress in Fair Work over the last few years and (ii) Scotland’s relative performance in Fair Work vis-à-vis a set of broadly comparable countries.
Updating the Fair Work Measurement Framework helped pinpoint areas where progress has been achieved and areas where more ambitious steps need to be taken. Looking into the future, the International Framework enables an understanding of what constitutes leading performance in Fair Work internationally. It also helps to understand the scale of Scotland’s ambition to become a Fair Work nation in the short and long term. Scotland performs well in some areas and has the potential to achieve leading status in the coming years. For areas where Scotland lags behind compared to the rest of the countries in the Framework (e.g., disability employment gap) more ambitious steps are needed to improve performance.
Additionally, this report highlights a set of policies and best practices that have facilitated success in countries achieving leading performance in key areas of Fair Work. These policies should be explored further in future research. Given Scotland’s unique institutional and legislative landscape, we have selected a group of policies that could be applicable to the Scottish context.