WIREDGOV

The first annual report on the delivery of the Fair Work Action Plan (FWAP).

Introduction

Published in 2022, the refreshed Fair Work Action Plan (FWAP) brings together our original Fair Work, gender pay gap and Disabled People’s Employment action plans. The refreshed FWAP also incorporates the actions from the Anti-Racist Employment Strategy, which was published alongside the plan. The ambition of the FWAP is for Scotland to become a leading Fair Work nation and meet the changing needs of our economy and workforce.

The FWAP is an integral part of Scotland’s National Strategy for Economic Transformation (NSET), which has a vision of an economy rooted in wellbeing and Fair Work. The FWAP is central to delivering the Scottish Government priorities of growing the economy and eradicating child poverty through increasing the household incomes and working conditions of priority family groups, many of which overlap with groups of people with protected characteristics.

Fair Work contributes to business success, with many employers in Scotland already implementing Fair Work practices, providing safe, secure, and healthy working environments, and promoting positive workplace cultures where staff can develop and progress, and where they are engaged and have their voices heard. Evidence demonstrates a link between respected, diverse and inclusive workplaces and strong performance, innovation and productivity. This shows that Fair Work is good for people, good for business and good for the economy.

Scotland has made significant progress towards becoming a leading Fair Work nation, with 22 of 61 actions in the FWAP complete (36%) and a further 33 making strong progress (51%). Some examples are:

• Strengthened Fair Work First conditionality has been applied to over £3.42 billion of public sector grant funding (April 2024 to March 2025).
• Scotland remains the highest real Living Wage (rLW) paying nation across the UK, with an estimated 88.6% of employees aged 18 or over paid the rLW or more and proportionally around five times as many accredited Living Wage employers in Scotland as in the rest of the UK.
• In 2024, the estimated proportion of women employees aged 18 and over earning the rLW or more in Scotland (87.3%) was higher than the proportion of women earning at least the rLW in the UK as a whole (81.3%).
• The number of real Living Hours accredited employers has quadrupled since the launch of the FWAP, providing secure and predictable working contracts for employees.
• Our flagship employability programme, No One Left Behind, has supported 86,427 people between April 2019 and March 2025. Of those who have accessed support:
  • 26,812 (31%) have entered employment
  • 39,616 (46%) are female
  • 19,988 (23%) report having a disability, with 4,468 (22%) of these entering employment
  • 26,154 (30%), reported at least one Long Term Health Condition (LTHC) since April 2019, with 5,818 (22%) of these entering employment
  • The most commonly reported LTHCs are a mental health condition (17% of all participants); a long-term illness, disease or condition (8% of all participants); and a learning difficulty (7% of all participants)
• In 2024, Scotland’s estimated median gender pay gap for full-time employees was narrower than the UK as a whole (2.2% vs 7.0%) and has been since 2003.
• According to the latest available full-year data, the estimated Disability Employment Gap in Scotland was 31.5 percentage points in 2024, compared to 37.4 percentage points in our baseline year of 2016, which shows we are on track to meet the ambition to at least halve it by 2038.

Employment law is reserved to the UK Government, which means that much of the progress achieved in Scotland through the FWAP is a result of strong collaboration with partners, including trade unions, equality organisations, and employers. These partnerships have created a platform for cultural change across Scotland as more workplaces engage with and see the benefits of Fair Work practices.

This first full impact report on the FWAP comes at a time when significant changes to employment law are being made across Great Britain. The Scottish Government is supportive of the overall ambitions of the UK Government Employment Rights Bill and welcomes the vast majority of the proposals. The Bill and the UK Government’s wider Make Work Pay programme align closely with our Fair Work agenda and will put on a statutory footing some of the progress we have made already in Scotland. Implementation of measures within the Bill, once it receives Royal Assent, will be phased and the Scottish Government will assess the implications for the future of Fair Work policy in Scotland.

The economic and fiscal context remains uncertain following a period of significant shocks to the Scottish economy in recent years, resulting from EU exit, COVID-19, the cost-of-living crisis, war in Ukraine, elevated tensions in the Middle East, and the introduction of new US tariffs.

These have had several significant impacts, such as:

• Widespread inflationary pressures affecting households and businesses, particularly from energy and food prices
• Subdued economic growth from cost pressures and weak demand, including the impacts on household incomes of higher prices and interest rates
• Global and domestic headwinds further weighing on economic growth
• The impact of inflation on public sector finances

Economic growth is forecast to remain subdued in 2025, reflecting challenging business conditions and weak consumer sentiment, lower global growth and elevated global economic uncertainty.

The Scottish Government remains committed to building a fair, green, growing economy where businesses are profitable and people live happier and healthier lives with higher living standards. Fair Work is central to achieving this aim, with government, business and all of society working together to achieve better outcomes. In the current economic and fiscal context careful consideration is needed on how we continue to implement the FWAP and deliver a wellbeing economy with Fair Work at its centre, providing the best possible outcomes for workers and business alike.

Richard Lochhead

Minister for Business and Employment

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