An economy fit for key workers?

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At some point over the past few months thousands of us will have experienced the sobering realisation that we are not, and never have been, “key workers”. Rarely, if ever, have we saved lives, nor do we risk our own health and safety to care for others. Furthermore, we probably play little part in ensuring the steady supply of food and other essentials to the communities around us.

With the now obvious, and undeniable, importance of the social care and food retail sectors to our society, this lockdown has prompted questions by organisations such as the Resolution Foundation and the Fraser of Allander Institute which the Scottish Government may have to do more to address over the next few years – namely why do so many “key workers” earn so little, why are their working conditions sometimes poor, and what can Government do to change this.

Highly valued but underpaid

There was considerable media coverage last weekend of the Resolution Foundation’s ‘What happens after the clapping finishes?’ report which discusses pay and conditions in the UK social care sector. Understandably, the press focussed on the issue of low pay and the high number of care workers earning below the real Living Wage (currently £9.30 per hour). Although there was a recognition that Scotland does “noticeably better” than other parts of the UK – attributed by the authors to Scottish Government action since 2016 – there was still some concern that “a large minority” of Scottish care workers (43%) earn less than the real Living Wage.

Looking at another sector with “key workers” – retail and wholesale employees – a very similar proportion earn less than the real Living Wage. According to Scottish Government analysis of Annual Survey of Hours and Earnings, 42.5% of Scottish shop and wholesale workers in 2019 earned below the real Living Wage. These figures are not broken down further by subsector (food, clothing, etc). However, with approximately 290,000 people working in the retail and wholesale sectors in Scotland, and a further 202,000 full-time equivalents working in the social care sector, we are talking about a significant number of Scottish “key workers” earning less than the Living Wage.

It’s not just about pay

We know that pay is but one dimension of what is known as “fair work”, albeit a fundamentally important one. The Fair Work Convention (FWC) a partnership between business, the third sector, trade unions, government and academia, has created a “framework” which helps define fair work. It found that a number of factors, including job fulfilment, respect, opportunities, effective voice and security, all contribute to what makes work fair or decent. As well as pay, type of contract can have a massive impact on security and respect within a job. The FWC believes that forms of flexible working “where the burden of risk falls disproportionately on workers”, including most zero hours contracts, should not be considered “fair work”.

As acknowledged by the Resolution Foundation, social care has far higher rates of people working zero hours contracts than the labour force generally (10% as compared to 2%). In Scotland, the FWC found that the prevalence of zero–hours, low–hours and sessional contracts in the social care sector is an outcome of the way care is purchased, often by public bodies:

“…too often care provider organisations do not know how many support hours are required on a day to day basis. This type of commissioning in turn impacts on the type of contracts offered to staff, with flexibility benefitting the employer and burdening the social care worker with unpredictable working hours and unstable earnings.”

In its 2019 report into fair work in the social care sector, the FWC set out five recommendations “designed to impact on the drivers of work and employment practices in the social care sector, and to ensure that any burden of flexibility in service provision is not borne disproportionately by workers”. In response, the Scottish Government established a Fair Work in Social Care Implementation Group comprising COSLA, the Coalition of Care and Support Providers (CCPS), Scottish Care, the STUC and Integration Authorities “to ensure that fair work is embedded in the delivery of social care services including the procurement process”. The current Covid-19 crisis makes this group’s work more urgent than ever, and MSPs may wish to inquire about what progress it has made over the past six months.

Parliament pressure and Government response

The pay and conditions of those working in the care sector has not gone unnoticed by the Scottish Parliament. In 2016, the Session 4 Economy, Energy and Tourism Committee recognised care as an “essential economic sector” and highlighted problems with worker contracts and the wider procurement process. More recently the Economy, Energy and Fair Work Committee inquiry into the gender pay gap recommended that the care sector be considered a key economic sector in Scotland alongside other priority sectors such as energy, tourism, etc.

Our Health and Sport Committee has also voiced concerns; in September 2016 it wrote to the Scottish Government about a number of issues highlighted during its Social and Community Care Workforce inquiry. These included a perceived lack of value placed on social care, low pay, recruitment and retention problems, an absence of travel payments for carers, precarious employment contracts and a lack of training and development opportunities for many people working in the care sector. Nevertheless, the Committee also heard about the high satisfaction levels enjoyed by many care workers as they make massive and profound contributions to the lives of hundreds of thousands of people every day, findings again mirrored in last year’s FWC report.

In response to these Parliamentary inquiries the Scottish Government highlighted the “journey of transformation” towards social/health integration and self-directed support, as well as the Government’s policy of increasing funding to pay the living wage to those care workers providing the council-commissioned care. Also mentioned was support for the Scottish Social Services Council in its efforts to upskill and develop the sector’s workforce. In terms of procurement of care by public bodies, the Government said it is “for public bodies to determine how best to establish contracts for care and support services which meet the needs of the service”. However, the fact that three years on, the FWC was still calling for “urgent interventions by policy makers, commissioners and leaders in the social care sector to improve the quality of work and employment for the 200,000 strong workforce in Scotland” suggests that the current system is not conducive to ensuring fair work.

What now – is more partnership the answer?

In its most recent Economic Commentary, the Fraser of Allander Institute sees the government’s response to the Covid-19 crisis as a possible “first step on a new social partnership between the State and business” potentially “unlocking a much broader conversation about inequalities and sharing the proceeds of growth more evenly across society.” The Fair Work in Social Care Implementation Group mentioned above is an encouraging example of such a partnership, however a more consistent, more widespread, social partnership approach to policy making and delivery may be required if we are to match some of the most successful countries in the world.

In fairness, the Scottish Government has been trying to build a social partnership infrastructure over the past decade, with initiatives like the Fair Work Convention, the Scottish Business Pledge, Sector Skills Councils and various “task forces” which have brought together business, government, trade unions and the third sector. Despite these efforts, Scotland appears to be a fair distance from countries with a more social partnership approach to economic and social policy making, such as Ireland, Germany and New Zealand (see, for example, the latter’s recently established Future of Work Tripartite Forum).

Of course, partnership is only effective if the institutions/partners are representative and, crucially, are willing to work constructively with the other partners. Looking at the retail sector, where union coverage is below 16% of the workforce, it is difficult to see which organisation could currently give voice to our key workers there. Likewise, there is little evidence of interest in existing social partnership initiatives from the employer side. The fact that none of the major supermarkets have signed up to the Scottish Business Pledge (the Scottish Government’s fair work policy aimed at promoting better pay and conditions through partnership) would indicate that partnership with government on fair work is not at the top of their priority lists. It’s clear that the very public nature of funding for social care makes partnership more achievable than in sectors dominated by private interests and global supply chains.

Conclusion – response, reset, restart, recovery…and reform?

In her statement to Parliament on Tuesday the Cabinet Secretary for Economy, Fair Work and Culture set-out the Scottish Government’s planned four step response to the current economic crisis: response, reset, restart and recovery. Perhaps another ‘r’ could be added to the plan – reform – with most commentators arguing we are unlikely to return to “business as usual” anytime soon. Ensuring our economy starts treating better those working in the sectors we value most is likely to be a priority in any post-COVID-19 society. The Scottish Government talks about looking “to the social and economic reforms necessary to achieve the best future for Scotland”. Working with a new sense of urgency and mission to implement the recommendations of the Fair Work Convention could be an important first step towards this.

Updated 24th April, 1.30pm

Greig Liddell, Senior Researcher, Financial Scrutiny Unit, SPICe