Introduction

We welcome the opportunity to respond to this review of enterprise and skills in Scotland. Scotland’s enterprise and skills agencies should fulfil a vital role in delivering Scotland’s economic priorities, fostering inclusive growth and investing in the skills of individuals. With a collective budget of £2 billion per year, it is pivotal that Scotland’s skills agencies are providing an effective and efficient service. It is also crucial that the agencies produce a good return on investment through joined-up approaches to support individuals, communities and employers. The World Economic Forum recently reported that 65% of children entering primary school today will end up working in completely new job types that do not yet exist. The system is therefore tasked with meeting current and future demand for skills. As such, the agencies covered by this review are involved in designing the kind of economy we want for the future. We note that this consultation comes at a good time, enabling an assessment of what works well – and what doesn’t - ahead of the devolution of the new employability support system. This knowledge will be extremely valuable in designing the new system of employability support, ensuring interventions support the needs of groups who are marginalised under the current system. Within a more universal approach we can offer more tailored support to prevent people moving into long term unemployment or from becoming economically inactive simply because they have been ignored.

An Economy for all: a human rights based approach

Economic growth remains slow in Scotland. Between 2015Q4 and 2016Q1, the gap between annual Scottish and UK Gross Domestic Product (GDP) growth increased by 0.4 percentage points in favour of the UK. Behind slow growth figures also lies further issues of in-work poverty, poor productivity and lack of progression. Although overall economic growth is important, the third sector is interested in encouraging Government and businesses to create a balanced economy grounded within a human rights based approach. Part of this involves valuing people’s wellbeing and putting the needs and views of individuals and communities at the heart of their economy and society. The end goal of enterprise and skills support should be the well-being and collective prosperity of people across Scotland. The Scottish Government is in the process of developing a framework for social security that is centred on dignity and respect. This should not be developed in isolation and it is pivotal that these principles are also applied to employability and enterprise. Following the recession of 2008, wages have stagnated and numerous people are underemployed. The IPPR recently reported that the sectors that have lost jobs in Scotland have been of higher skill levels than the sectors that have expanded. The people affected by these changes are the very people that the third sector works with every day – at food-banks and in advice centres; attending youth clubs and work programmes; making the most of community groups and support centres. The NPF has facilitated some movement away from a singular focus on GDP as the overarching indicator of success. However, increasing GDP remains the overarching goal. This ensures that everyone remains focussed on contributing to this one measurement, regardless of the negative impact this may have on other aspects of our lives. We support further movement away from GDP towards alternative measures which are centred on the human rights of individuals. On this front, the Oxfam Humankind Index sought to value the things that matter to people in Scotland. Oxfam Scotland found that health and housing were the top priorities for people, alongside work satisfaction, job security and having a sufficient income. Actual wealth featured low down on the scale, and when it did emerge, people highlighted the importance of sufficiency and security of income, rather than having large amounts of money. Factors such as job security and mental health are important in producing ‘opportunities for all of Scotland to flourish’. It is therefore possible that a narrow focus on GDP may actually undermine this overall goal, rather than advance it. We would like to see more attempts to measure the success of these agencies against the goals of an inclusive economy.

The current approach: barriers

Targets

Modern Apprenticeships in Scotland are subject to politically-defined targets. These targets do little to improve the quality, nature and inclusiveness of MAs in Scotland. Numerical targets are an arbitrary measure of success and ignore other measures of fundamental importance, such as attainment, responsiveness to employer needs and equalities. Often such targets lead to an increased reliance on lower-level apprenticeships, rather than those with the most economic and social value, as these apprenticeships are easier to recruit and the least-expensive to procure. When the focus shifts to the goal of meeting politically-defined targets, those who require additional support may be ‘parked’ in favour of those closest to the labour market. The hardest to reach are not well-served by increasing targets. The expanding apprenticeship family should meet labour market demand, serving both current and future employer needs, and also serve the inclusive growth agenda. These targets are symbolic of broader prescriptiveness from Government. Rigid letters of guidance prevent enterprise and skills agencies from being responsive to demand and changes in the economy. In some ways, therefore, if skills and enterprise agencies are not meeting the objectives of the NPF and economic strategies some blame must lie with Government itself for the priorities outlined within these annual letter of guidance.

A cluttered and inflexible landscap

There is currently a lack of leadership in the various realms of support services, at both a national and local level and there remains a lack of connectivity between the various sources of funding, training and advice. This leads to a cluttered and complex landscape of provision. Employers are not always aware of the support available to them, or where they can find assistance. There is also a disparity in practice from one local authority to the next, meaning that national organisations find it difficult to identify and secure support across their operational areas. Within this, the continual focus on ‘pipelines’ and state-commissioned approaches does not enable flexibility and thus does little to recognise the needs of the individual and their community. This poses particular issues for those who have complex needs. Recent research by the IPPR also highlights that longer working lives and technological change has necessitated a lifetime of learning and training. Present approaches do not enable learners to pick-up and drop learning through flexible modes of delivery. The cut in part-time college places will also have an impact on the ability of certain groups for which full-time courses are impractical, such as adult learners and those with caring responsibilities, to participate in upskilling and reskilling. Moreover, with support often targeted towards younger people, it is important that agencies made a concerted effort to develop the skills of the 50+ cohort, particularly given that research has found that this group are also failed by the existing work programme approach.

Volunteering

There is engagement with Skills Development Scotland (SDS) on volunteering, in particular in the realm of their national guidance offer and signposting to volunteering. The new My World of Work (MyWoW) website has devoted space to volunteering and has valuable information on volunteering placements, opportunities and skills. This website also utilises national opportunity data, which directs individuals towards opportunities. Moreover, SDS engages with volunteering via Youth Employment Boards. However, despite these positive developments, there is no mention of volunteering in the SDS 5-year corporate plan suggesting it has not been prioritised at strategic level. There is also no mention of volunteering in the Highlands and Islands Enterprise (HIE) or Scottish Enterprise (SE) Business plans. In future planning cycles, volunteering should be an integrated objective with strategies designed in collaboration with third sector partners.

Equalities: gender and disability

Certain groups remain marginalised within the Scottish labour market and employability support has so far been unsuccessful in overcoming the specific barriers facing disadvantaged groups. Disability and gender continue to be two characteristics of labour market segregation and marginalisation. Women’s over-representation among the lowest paid in the labour market means that many women are reliant on benefits to top-up their low pay. Research has found that women are twice as dependent on social security as men with 20% of women’s incomes coming from the benefits and tax credit system compared with less than 10% of men’s. Scotland’s skills and enterprise agencies should thus be working to actively overcome the barriers which prevent or restrict women’s labour market participation. Engender have also found that if the number of female owned businesses grew to equal men, we would have an additional 108,480 businesses, bringing a 5.3% growth to the Scottish economy. Engender have recently called for a £50m Women’s Employment and Enterprise Challenge Fund to help reduce the inequality between women and men in business-ownership and employment. Skills-interventions are not immune to equalities issues and traditional occupational segregation, as highlighted by Modern Apprenticeships. Only 3.9% of apprenticeship starts in Scotland in 2015/6 were disabled and women account for only 5% of engineering apprenticeship starts. In 2015/16, 74% of MA frameworks had a gender balance of 75:25 or worse. The SNP manifesto pledged to deliver 30,000 apprenticeships and to target additional places on higher-level courses, including graduate-level apprenticeships. However we argue that a focus on higher-level qualifications will only reinforce this trend, rather than dismantle existing structural disadvantages. Given the third sector has established links and networks to marginalised groups, it is important that Scotland’s skills and enterprise agencies engage with the third sector as a key partner, rather than a service provider. Collaborative approaches are key to the success of the equalities agenda and we urge the Scottish Government to promote partnership working across the third and public sector in both service design and delivery.

In-work support

The proportion of workers progressing from low-skilled jobs to mid-or high-skill jobs is lower in Scotland than the UK (excluding Northern Ireland) as a whole. Between 2010 and 2015, 4.4% of workers in low-skilled roles progressed to higher-skill roles each quarter in Scotland, compared to 5.1% in the UK as a whole. There is need to focus more attention and resources on in-work support and progression, particularly given the importance of such support for wellbeing and overcoming in-work poverty. In-work support is just as important as supporting people into jobs and training. Skills and enterprise support should be joined-up with planning in other areas, such as access to transport and vocational support. The ‘See Me’ campaign highlighted the importance of in-work support for individuals with mental health problems. Supporting employees promotes sustainable work and makes for a more productive, healthy workforce.

Opportunities

Third Sector as an employer

There is also potential for greater engagement with the third sector as an employer. The Scottish third sector has a total income of £4.9bn and the sector employs 138,000 people – as many people as the Creative Industries and the Energy Sector combined. Moreover, around 1.3 million volunteers formally volunteer with organisations, providing 126 million hours of support. Economic strategies, Regional Skills Assessments and Skills Investment Plans are important tools in this planning process. At present, there has not been enough engagement with the third sector on SIPs and we believe greater engagement would facilitate better skills planning and asset mapping. It is worth remembering that SE and HIE support also applies to the third sector organisations in their role as an employer. The third sector incorporates social care providers, housing federations and thriving social enterprises and thus the strategies of all of our enterprise and skills agencies must speak to the third sector as a key audience and partner. At present, the SDS Corporate Plan and Scottish Funding Council’s Strategic Plan make no mention of the ‘third sector’, Scottish Enterprise’s Business plan has one mention while HIE’s Operating Plan mentions the third sector three times. This does not suggest that agencies are given the appropriate focus to the third sector, or that the voluntary sector is viewed as a potential area of growth and investment.

Streamlining

Through working with SDS and the Scottish Government, there may be possibilities for greater streamlining between Community Jobs Scotland (CJS) and apprenticeships. This would involve making sure that the sector are able to create and support meaningful apprenticeships and support employers to put young people, who have come through CJS, on to apprenticeships. It is also worth remembering that the Third Sector is also supportive of getting more involved in Apprenticeships and there may be scope to develop this role over time. The success of CJS in engaging with marginalised groups and promoting opportunities for all should provide something of a model to replicate within other projects. CJS has a proven track-record in helping those furthest for the labour market and there may be scope to realign CJS as both a means of obtaining an employment outcome in and of itself, while also enabling CJS to become a pre-apprenticeship option. A key target moving forward should be greater alignment and more joined-up approaches to support for both individuals and employers. Developing collaborative approaches to skills and enterprise will enable greater engagement with marginalised groups and enable community approaches to become more integrated in the overall system of support. The third sector has wide-ranging expertise in working with marginalised groups and there may be scope to ‘scale-up’ and consolidate some of the innovation visible in the third sector’s projects and programmes. To work with third sector organisations only through contracting-out arrangements to deliver programmes erodes the distinctive potential of the sector to design programmes and target provision through collaborative approaches.

Links with community

Within the complex picture of provision, there is also a lack of recognition as to the importance of community in facilitating self-building, confidence and peer support. Unlocking the potential of communities can allow individuals to contribute to society in a manner that suits their circumstances and capabilities at a particular time in their life. For particular groups, community approaches are especially important in responding to their specific needs. Vocational rehabilitation approaches and better links with social care and other provision may also facilitate inclusive growth. A focus on community support is not only beneficial to the individual but in turn also advances the common-good for the wider community itself. Community infrastructure offers a more holistic approach to supporting employability, assisting people to build on their own capabilities, gain social connections within their community, building confidence and self-worth. Self-directed support, leading to some degree of self-discovery, affords people the space to realise how they can best contribute to society outside the traditional Beveridge-era categories of employment, idleness and benefits. HIE do a lot of important work in community development, developing growth sectors and supporting social enterprises. There is an argument that this work would have important social development value across all of Scotland, as this is a gap not currently being filled by SE. At present, SE give little focus to the value of social enterprises at strategic level. While the community development role could be provided by SE across Scotland, HIE already have the expertise necessary and it would be worthwhile to examine how their role could be expanded.

Digital

Research by Tinder Foundation identifies that 90% of all new jobs require digital skills, with almost three-quarters (72%) of employers revealing that they would not even interview a candidate who does not possess basic computer skills.  We are seeing an increase in the requirement of digital skills in some form across the majority of jobs. Thus the need for investment in basic digital skills for all is apparent. In Scotland there are still approximately 800,000 people who do not effectively access the internet. There is a significant cross over between those individuals who don’t have the skills to be online safely and confidently and the organisations which support them. Despite long-term commitment to digital skills and inclusion by these agencies, there remains issues with connectivity, basic digital skills and skills gaps. In the realm of digital, collaborative working is necessary particularly given the fact that technological change means that this agenda can easily race away from us. SCVO are currently working on a One Digital Project offering support to individuals and providing business advice. The Challenge Fund will also be reopening soon, supporting existing projects and encouraging new projects. The fund focuses on developing basic digital skills and gives greater weighting to disadvantaged groups.

Skills

Despite high-levels of investment, there remains a skills mismatch in Scotland. While 77% of businesses operating in Scotland expect to have more jobs for people with higher-level skills over the coming years, over two-thirds of businesses in Scotland (69%) are not confident about filling their high-skilled jobs in future. Comparing entry-level mid-skill vacancies in 2014 to the number of mid-skill qualifiers from the skills system, the IPPR estimate that there is an aggregate gap between skills demand and supply of 29,000 people annually. Moreover, specific business and business bodies note that there is a skills gap within their particular sector. For example there is continual analysis of skills gaps in ICT/Digital with a perceived gap of 11,000 jobs. Although the role of our enterprise agencies is important here, it would be wrong if there was a sole reliance on the public sector to fill skills gap while the private sector continues with business as usual. It is not the sole responsibility of Scottish Government and its agencies to fulfil the economic strategy. The private sector, and indeed the third sector, must play its part. There are many sectoral and organisational strategies that can be adopted, including workforce planning, investing in on-the-job training and improving staff retention. In line with Commission for Developing Scotland’s Young Workforce (DYW), the private sector should be proactive in forming partnerships with education establishments and other businesses. At present, financial and accounting sectors have had some success in this and it is important for other sectors to learn from best practice. Our enterprise and skills agencies can only be so successful without this buy-in from business.

Education

It is also necessary to take a step back to think about the role of the education system as a key component part. Much of the skills needed should be coming through schools and the curriculum for excellence. Moreover, DYW highlighted key changes for better alignment between schools, training providers, colleges and employers to provide a blend of learning. At a recent Employment fair event in Glasgow, SCVO handed out surveys to young people asking about their support needs. It became very clear that there were numeracy and literacy issues which would be a barrier to skills interventions. Without basic education, young people are unable to participate in further education, training or employment. Moreover, Rod Bristow, President of Pearson’s UK business, recently commented that ‘by far the most important “skills factor” centres on attitudes and aptitudes such as ability to present well. The majority of employers have concerns in these areas, whereas less than a quarter worry about formal qualifications. These soft skills have hard outcomes’. These fundamental, basic skills should be integral to the education system in Scotland. With technological advancement, digital skills should form a pivotal part of the core curriculum. While projects such as Codeclan are important in generating the skills demanded by the labour market, this is not a substitute for school education. At present, schools are not aligned to workplace skills and future skills demand. We acknowledge that this is a challenge given that the education system is tasked with producing skills for future demand, which has often not yet been identified. The DYW found that only 27% of employers offer work experience opportunities and 29% of employers recruit directly from education. The education system does not equip young people for the world of work. A meaningful partnership between schools and employers, across all sectors of the economy, would assist in this.

Conclusion

There are numerous challenges and opportunities within the skills and enterprise system in Scotland. Given the levels of public funding in the system, it is crucial that there is a good return on investment. It could be perceived that this amounts to competing priorities and perhaps the key question facing the Scottish Government is how parallel concerns can be brought together under a coherent narrative. However, starting to think about enterprise and skills support in human rights terms will promote many of the standards included in this response including flexibility, participation, equalities and inclusive growth. Moving away from top-down approaches that marginalise individuals and communities in decision-making will ultimately facilitate better outcomes. Overall, our specific reflections on the system of support are:

• New flexible approaches, incorporating self-directedness and community networks, are key to successful support for employers, individuals and communities. Given societal and economic changes and the general volatility of the economy, as highlighted by the oil and gas industry, inflexible pipelines are unfit for purpose. The system of prescriptive Letters of Guidance will have to change to enable flexibility and responsiveness from agencies
• The landscape is cluttered which creates a complex picture of support which is difficult to manoeuvre. There needs to be streamlining within the system and greater signposting to appropriate support. Alignment within the skills and enterprise system, in addition to the employability and education agendas, is key here.

Overall, we believe return on investment should not be measured only in terms of GDP, but rather in terms of inclusive growth, the participation of disadvantaged groups, sustainable employment, the provision of digital skills, skills matching and social development. Such objectives can only be achieved with a joined-up coherent system of support delivered simultaneously by Scotland’s enterprise and skills agencies in collaboration with the third and private sector as key partners.

Contact

Ruth Boyle Policy Officer Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB Email: ruth.boyle@scvo.scot Tel: 0141 465 7532

About us

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the third sector. There are over 45,000 voluntary organisations in Scotland involving around 138,000 paid staff and approximately 1.3 million volunteers. The sector manages an income of £4.9 billion. SCVO works in partnership with the third sector in Scotland to advance our shared values and interests. We have over 1,600 members who range from individuals and grassroots groups, to Scotland-wide organisations and intermediary bodies. As the only inclusive representative umbrella organisation for the sector SCVO:

• has the largest Scotland-wide membership from the sector – our 1,600 members include charities, community groups, social enterprises and voluntary organisations of all shapes and sizes
• our governance and membership structures are democratic and accountable - with an elected board and policy committee from the sector, we are managed by the sector, for the sector
• brings together organisations and networks connecting across the whole of Scotland

SCVO works to support people to take voluntary action to help themselves and others, and to bring about social change. Further details about SCVO can be found at www.scvo.scot.