1. Scottish Economic Strategy: Inclusive Growth Gary Gillespie, Chief Economist EDAS, Inverness 30 th November 2015.

2. Scotland’s Economy Strong aggregate post-recession performance

3. H&I’s Economy GVA per head 2004 – 2013 Source: ONS Regional GVA Unemployment Rate Source: APS July-June

4. Challenges remain: Real Wages and Employment Opportunities

5. 1 in 7 Post Recession - Is this the new ‘normal’?

6. Inequality: In terms of the Gini coefficient, Scotland would rank 20 th out of the OECD countries for income inequality. Productivity: Scotland is currently ranked 19 th out of 32 OECD countries when measured by GDP per hour worked. International Rankings - Scotland

7. From data to strategy: Scotland’s Economic Framework

8. Scotland’s Economic Strategy

9. SES: Highland’s & Islands

10. So what is Inclusive Growth? Inclusive growth: Growth that combines increased prosperity with greater equity; that creates opportunities for all and distributes the dividends of increased prosperity fairly. Characteristics of inclusive growth: –Multi-dimensional: social inclusion, well-being, participation, environmental –Sustainable economic growth that tackles inequalities in outcomes but also inequalities in opportunities –More equal growth across cities, regions and rural areas, and recognise importance of place/community in delivering this –Understanding synergies and trade-offs, short-term and long-term impacts –Delivered in partnership – public sector, third sector, trade unions, businesses and communities

11. Policies can achieve both growth and inclusivity objectives – 2 Examples Housing Policy Growth/ Inclusivity Impact Investment in Housing Stock Growth Growth and employment in the construction sector Productivity and labour supply (affordable homes improve labour mobility) Inclusive Increased supply of affordable homes particularly impacts those with the greatest need and can improve social outcomes such as health and wellbeing and educational attainment. Energy Efficiency Schemes Growth Local jobs and output; Productivity and growth (spreading employment); Green jobs and skills development (e.g. modern apprentices). Inclusive Reduction in carbon emissions; Reduce fuel poverty and energy bills and improve living standards; Regeneration of neighbourhoods (external wall insulation can give social housing stock a significant ‘face-lift’); Supporting fair work (e.g. paying the living wage through Warmer Homes Scotland).

12. Inclusive Growth Framework

13. NEW APPROACHES IN SCOTLAND So what are we doing?

14. The Scottish Business Pledge The Scottish Business Pledge is a Government initiative which aims for a fairer Scotland through more equality, opportunity and innovation in business Business Pledge has 9 key components: 1.Paying the living wage 2.Not using exploitative zero hours contracts 3.Supporting progressive workforce engagement 4.Investing in Youth 5.Making progress on diversity and gender balance 6.Committing to an innovation programme 7.Pursuing international business opportunities 8.Playing an active role in the community 9.Committing to prompt payment Businesses have to meet at least 3 of the nine pledges to apply

15. Business Pledge – Making Progress As at 2 November 2015: 140 businesses had agreed to the Scottish Business Pledge 24,480 Scottish Jobs 67% of pledge businesses are small (less than 50 people) Number of pledge businesses by sectorNumber of pledge businesses by size

16. A Scottish Approach to ‘Fair Work’ Fair Work approach in Scotland is about tackling inequalities in the workplace as the key to sustainable economic growth through progressive workplace practices such as: Workplace Innovation Increased Gender Equality and Diversity Employee Representation Living Wage/no zero-hours contracts/job security Benefits to Individuals, Firms and Economy – Well-being Satisfaction, Innovation and Productivity Partnership Approach – employers, employees and trade unions – to share, encourage and adopt best practice across the country

17. Inclusive Growth – via Procurement? Public sector spending on goods and services across Scotland, in areas such as health and education services, amounts to over £10bn per year. Scotland’s Rail Franchise – single biggest contract led by Scottish Government worth around £7 billion over 10 years: –Operates over 2,270 train services each day –86 million passenger journeys per year Franchise commitments include: Living Wage offered to all staff and sub-contractors No zero-hours contracts Discount travel for those job-seekers At least 100 apprenticeships Skills development: commitment to achieve accredited qualifications for staff over a range of subjects. Guaranteed trade union representation on Board meetings.

18. Social Enterprises – An Inclusive Growth Business Model? Key Characteristics of a Social Enterprise  Trade like any other business, but with the primary goal of delivering a social or environmental benefit  Operate in sectors that will have a big impact on inclusive growth (employability, health and social care)  Profits reinvested or used for the benefit of the people it serves Social enterprises are putting our economic strategy into practice: –Investment – key service provision in housing, environment –Innovation: design and delivery of services –Inclusive Growth – services provided to communities, most pay living wage, headed up by women –Internationalisation – 5% export, potential to do more? SG supporting international strategy for sector

19. Zero Waste/ Circular Economy – Recognising Limits of Our Environment Zero Waste Plan (2010) – UK’s most ambitious recycling targets –70% of all Scotland’s waste by 2025 Economic strategy explicitly recognises that a more circular approach to achieve economic goals –Focus on re-using; consultation on creating a more circular economy #MakeThingsLast –Scottish Circular Economy Network – industry-led Scottish Institute for Remanufacture (2015) –First in Europe, only one of 4 in the world –Exploiting expertise in remanufacturing, and innovative approaches

20. How do we measure progress? Scotland’s Economic Strategy set ambitions to be in the top quartile of OECD for sustainability, inequality, well-being and productivity. The four headline ambitions can be characterised as capturing the following principles of the economic strategy: –Scotland’s growth potential (productivity); –Equity (inequality); –short-term indicators of outcomes and progress (well-being); and, –long-term view of Scotland’s productive capacity (sustainability). The Council of Economic Advisers is advising the Scottish Government on the development of its measurement framework.

21. National Performance Framework

22. UN Sustainable Development Goals In July 2015, Scotland became one of the first nations to sign up the to the United Nations Sustainable Development Goals (SDGs), an international action plan to tackle poverty and inequality and promote sustainable development across the world by 2030. The SDGs are in line with many of Scotland’s existing ambitions and so measures of progress are already available for some of the objectives. However, Scotland’s commitment to the SDGs will require appropriate measures for all of the objectives.

23. Understanding the Challenges…. Note: The end points represent the 10 th and 90 th percentiles. Distribution of hourly earnings, excluding overtime, by sector in Scotland, 2014 Source: ASHE, ONS