Scotland's National Strategy for Economic Transformation

By Marek Zemanik, Senior Public Policy Adviser at the CIPD in Scotland 

Last month, the Scottish Government published its new 10-year economic strategy - Scotland's National Strategy for Economic Transformation. Scotland is certainly not short of action plans, frameworks and strategies across the whole of Government, so the ambition to consolidate these under a renewed overarching strategy is an amicable one. This is also the first national economic strategy that aims to build on the lessons from the pandemic and is also the first published under Kate Forbes as the Cabinet Secretary for Finance and the Economy. So has it achieved what it set out to achieve and what does it mean for our profession? Read on to find out. 

Key themes 

Perhaps the most striking message in the strategy is how it is unashamedly pro-business – emphasising a Scotland as a nation of entrepreneurs and innovators, with competitive advantages. This has not always been as spelled out as it is here and should be welcomed. The strategy also makes it clear that it is focusing on a narrow set of five priorities and a sixth programme all about delivery. The latter in particular, with clear accountability frameworks for delivery and revamped structures, should be a priority and needs to work well. 

Well-known challenges and opportunities are highlighted up front. Scotland’s high inactivity rates, wide regional inequalities and lagging productivity have been persistent challenges, joined by the economic impacts of the pandemic. On the other hand, there are opportunities in our strong academic research base, the transition to net zero as well as further boosting existing strong sectors like food and drink or tourism. 

While the strategy, in its own words, is “intentionally focused on a small number of priorities”, the five areas are rather broad and include a series of other plans or programmes of work that will only appear at a later stage. The focus is more in name than practice. That being said, it is hard to disagree with the five broad areas chosen: 

Entrepreneurial People and Culture seeks to establish Scotland as a world-class entrepreneurial nation founded on a culture that encourages, promotes and celebrates entrepreneurial activity in every sector of our economy. This aim is underpinned targets to increase the number of start-ups and scale-ups. 

New Market Opportunities seeks to strengthen Scotland’s position in new markets and industries, generating new, well-paid jobs from a just transition to net zero. The strategy argues that Scotland’s human and natural capital and technology and research capabilities provide a good basis of global competitive advantage, with the potential to build world-leading industries in this area. 

Productive Businesses and Regions seeks to make Scotland’s businesses, industries, regions, communities and public services more productive and innovative. We know that Scotland’s productivity performance varies across different sectors and there are long-standing regional inequalities. While most of the interventions in the strategy should have an impact on productivity, this chapter focuses on infrastructure (transport and digital) and regionally-driven strategies. 

Skilled Workforce seeks to ensure that people have the skills they need at every stage of life to have rewarding careers and meet the demands of an ever-changing economy and society, and that employers invest in the skilled employees they need to grow their businesses. This chapter focuses on attracting migrants from the rest of the UK, lowering inactivity levels and digital and other transferable skills throughout our lives. 

A Fairer and More Equal Society seeks to reorient Scotland’s economy towards wellbeing and fair work, to deliver higher rates of employment and wage growth, to significantly reduce structural poverty, particularly child poverty, and improve health, cultural and social outcomes for disadvantaged families and communities. 

Things to keep an eye on 

Looking at each chapter in more detail, there is a range of proposed actions (some we have heard of before) that will be of interest to our members and which align with policy work the CIPD has been doing over the last two years. 

One of the more interesting proposals is a lifetime upskilling and retraining offer that is more straightforward for people and business to access and benefit from. This will build on the National Transition Training Fund and Flexible Workforce Development Fund, which the CIPD contributed to an evaluation of earlier this year. This is a crucial area to get right. 

Recognising the labour shortages many businesses are currently reporting the strategy pledges to implement a focused Talent Attraction programme to attract key skills and talent from the rest of the UK. In the absence of immigration powers, this would use Scotland’s unique strengths to boost inward migration. Our members have been telling us of the recruitment challenges they are experiencing, so it will be interesting to see the mix of incentives on offer. 

The strategy also announces the 2022 launch of the Centre for Workplace Transformation. While the precise form remains to be announced, it is intended for the Centre to support experimentation in ways of working post-pandemic, including hybrid working, to deliver good jobs and to help businesses attract and retain talent, recognising the importance of the way workplaces operate. We have a range of evidence in this area and had initial discussions with civil servants on this. 

Unsurprisingly, we see a restated aim to apply Fair Work conditionality to grants, requiring payment of real Living Wage, and channels for effective workers’ voice by summer 2022. This conditionality will be further extended with clear standards and minimum requirements to cover all forms of Scottish Government support. Furthermore, the strategy announces sectoral Fair Work agreements, in partnership with industry and trades unions. 

There is also a nod to taking further steps to remove barriers to employment and career advancement for disabled people, women, those with care experience and people from minority ethnic groups, but specific steps will be outlined in individual strategies and action plans later this year. Our own Working Lives Scotland reports have consistently highlighted gaps in this area. 

Interestingly, we also see a commitment to build on the principles of the Young Person’s Guarantee, developing an all age guarantee of support for those most disadvantaged in the labour market. It will be interesting to see what form this takes and, crucially, how people professionals  can contribute as they did with the Young Person’s Guarantee. 

Finally, and this is another longer term ambition, there is a pledge to establish a programme to radically transform the way in which the public sector in Scotland provides support for workers and businesses. We know from our members that the business support landscape can feel a bit cluttered and hard to navigate, especially for the smallest of businesses. We have seen pledges like this before of course, but the ambition is welcome. 

What next? 

There are lots of positive noises coming out of the strategy, with plenty of ambition. Most of it relies on further work and additional plans and at times it can feel like it’s trying to do too much despite the claims of its focus. 

As ever, it is the delivery of the pledges that counts. Within six months of publication of the strategy we are being promised a series of delivery plans, setting out how the programmes will be taken forward and, crucially, demonstrating collaborative working with business. Our profession will have a key role to play here, so stay tuned for more.