In this weeks column, Julia Rampen looks at the Scottish government’s “Fair Work First” agenda and it’s implications for workplace diversity and inclusion.

Ahead of the Scottish National Party’s conference in Glasgow earlier this month, most newspaper headlines were about whether or not Nicola Sturgeon would back another referendum on Brexit (yes) or call for another independence referendum (no).

A world-leading fair work nation

Less well-reported was a speech by Derek Mackay, the finance secretary. Mackay’s official title is Cabinet Secretary for Finance, Economy and Fair Work, and in his speech, he tried to explain what the last part of his brief meant. “We are also introducing criteria to ensure that business support grants such as regional selective assistance deliver on our ambition to be a world-leading fair work nation,” he said. “If we give you that financial support we expect conditions around fair work to be met.”

In short, the Scottish government will use its power to award contracts and grants to make more demands of business. And although Mackay did not elaborate on it in his speech, the policy has implications for diversity.

As well as investment in skills and training, payment of the living wage, and no zero hours contracts, the Scottish government will consider whether the companies are taking action on gender pay and genuinely engaging with the workforce. It has committed to rolling the criteria out by the end of this Scottish parliament, currently expected to be 2021.

Of course, if the Scottish government was alone in doing this, inert bosses in the rest of the UK would have nothing to worry about. But although Nicola Sturgeon may have vastly different ideas about the shape of the union to other politicians, on this she is far from alone. Political parties of all stripes are becoming more interventionist when it comes to what government requires of business.

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The Preston model

The Scottish government’s “Fair Work First” policy is in many ways a combination of two existing initiatives. The first is the widely-admired Preston model, named after the Lancashire town that has pioneered it. The model is in turn based on the idea of community wealth building, pioneered first in Spain and then the US, which aims to make business better serve local needs. One of the strategies community wealth builders use is to focus on “anchor institutions”, such as hospitals, universities and other important local employers, in the belief that changes in these organisations will create ripples of their own. In Preston, the council, along with other important local institutions like the University of Central Lancashire, is using its clout and spending power to award contracts to local employers.

The second is a trend for government to demand more information from the private sector about its work on diversity and opportunity. The Social Values Act, a 2012 law by the UK Coalition government that requires public sector employers to consider the wider consequences of awarding a contract. A report two years on found respondents felt the Act had a positive impact on opportunities for young and disadvantaged people, and the provision of training. But the same report bemoaned that the Act was sometimes ignored, or applied so zealously it became a bureaucratic mess.

The Scottish government’s approach combines the muscularity of the Preston model with the  Act’s interest in deeper organisational change. Larger companies are already required by the UK government to report on the gender pay gap – and soon, possibly, the BME pay gap as well – but so far the main consequence for having one is public shame. Under the fair work approach, the consequence could be losing out on that lucrative contract your boss was relying on. Far more awkward.

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Fair Work Convention Framework

As for what fair work actually means, some insight can be gained from looking at the Fair Work Convention Framework, published in 2016. As well as pay, the report noted that ethnic minority and female workers could miss out on apprenticeships and promotions, and included a series of steps to address such quiet discrimination. Other issues discussed included career progression, job stability and harassment. “Fair work is more than adhering to minimum legal standards of employment protection and is much more than ‘business as usual’ – it is about fundamentally rethinking what happens in our workplaces,” the report concluded.

As anyone who has ever had a job knows, there is a huge difference between agreeing what’s fair on paper and putting it into practice. For all that governments demand better behaviour from employers, they often fail by their own standards. See the equal pay lawsuits against councils, the racism accusations against councils, and the civil service gender pay gap, not to mention the Cabinet secretaries resigning over “Pestminster”. Then there are the practical reasons why governments may be willing to do business with Pale, Stale and Male Plc. If you’ve got a limited pot of money, and you really need to find a care home provider before angry families storm the town hall, you’ll overlook the fact the executives all seem to be men and the ill-paid care assistants, mostly women. And in an age of austerity, that pot of money can be very limited indeed.

Populist procurement?

Nevertheless, there is undoubtedly growing recognition among politicians that employers need to pay more than lip service to the legal ideals. It is now almost consensus that the current destabilising wave of populist politics is driven in part by a reaction to difficult economic conditions. Tellingly, Preston City Council’s description of its procurement model uses a phrase very similar to a Brexit slogan. This is, it says, “local people taking back control”.

In the past decade, the idea that you should have a diverse workforce has, at least in theory, become commonplace. Public shame has made it much harder for prominent organisations to get away with an Identikit senior management (for a sense of how things have changed, watch a random episode of Have I Got News For You from circa 2008 and see how many women there are on the panel). But behind the office blinds, too much stays the same. From the Social Value Act to Fair Work, governments are searching for ways to prod employers into action. Those that don’t take the hint cannot cry unfairness next time a contract comes up.

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