Merry Christmas from EDAS and Review of Support for Economic Development in 2016

EDAS' December E-Bulletin is out!

Read Festive Greetings from our Chair, Conference Report, 2016 Review and more: http://conta.cc/2gSyAZw 

Significant Rise in Scots Earning Below Living Wage

Scotsman - The number of Scots struggling to get by on low pay is on the rise prompting fresh calls for the Scottish Government to “get to grips” with poverty among people in work.

The flatlining economy and stagnant rates of pay has resulted in an increase of 70,000 workers north of the Border getting less than the real living wage over the past three years, according to the Scottish Parliament Information Centre (SPICe).

It means that 467,000 Scots – about a fifth of the country’s workforce – were paid less than the current £8.45 living wage level. This is up from 395,000 in 2013 – an 18 per cent increase.

The real living wage is calculated by a cross section of low pay groups. This is higher than the national minimum wage of £7.20.

Read article in the Scotsman. 

£10m for Workforce Development in Scottish Government Budget

Scottish Government - Employers in Scotland are set to benefit from a new £10 million skills fund which will bring the college sector together with industry to better support in-work training.

The new Workforce Development Fund will be introduced to provide employers with workforce development training to up-skill and re-skill their existing workforce. The initiative is in direct response to a call from employers in their response to the Scottish Government’s recent consultation on the introduction of the UK Apprenticeship Levy.

Due to be introduced in Autumn 2017 the fund will also address skills gaps and the training needs of older workers where a full apprenticeship might not be appropriate.

The fund will be developed with the input of employers through the industry-led Scottish 

Apprenticeship Advisory Board, Colleges Scotland and the Scottish Funding Council.

The new fund was announced as part of the Scottish Government’s response to the UK Government’s Apprenticeship Levy, and launched by Minister for Employability and Training, Jamie Hepburn, at an event at New College Lanarkshire, Motherwell Campus.

Other measures announced in the response include commitments to improve the  Modern Apprenticeship programme as we continue planned growth to 30,000 new starts each year by 2020; and continued implementation of the Youth Employment Strategy: ‘Developing the Young Workforce’.

Source: Scottish Government

Tourism Leads Upbeat Scottish Economic Outlook

BBC News - Tourism leads an upbeat new assessment of the Scottish economy, with strong signs of recent growth and expectations of a positive start to 2017.

The Royal Bank of Scotland Business Monitor shows transport and communications also performing well.

About 400 firms across a range of sectors in the Scottish economy were questioned.

The findings contradict other recent survey evidence suggesting confidence being hit by Brexit uncertainty.

The RBS survey was carried out by the Fraser of Allander Institute at Strathclyde University, and balances those firms with positive results against those reporting negatively.

Continuing difficulties

A total of 36% of firms reported an increase in total volume of business during the last quarter compared with 25% which reported a fall.

There were similar measures for new business, though firms in north-east Scotland reflected the continuing difficulties of winning business amid the downturn in the oil and gas sector.

The figures were strongest for the central belt and the Highlands and Islands.

Despite the pound weakening, which should make it easier to export, this survey went against the signals seen in other evidence, by reporting a seventh consecutive quarter of weak overseas sales.

Just 12% of firms reported export activity rising, with 26% saying they saw a fall in the last quarter.

Unlike the Purchasing Managers Index, published at the start of this week, it also found manufacturing doing worse than other sectors.

The rise in the legal minimum wage has put up costs across the economy, and particularly in construction, tourism and distribution.

'Solid but unspectacular'

And in capital investment - seen as vital to maintaining growth momentum through next year - the RBS survey found 40% of firms reporting a rise compared with 16% saying there has been a fall. The positive gap between those two is the widest in more than two years.

Stephen Boyle, chief economist with the Royal Bank of Scotland said: "This Christmas we can raise a festive glass for Scotland's economy that's more than half full.

"Our businesses are ending the year on a positive note, with solid if unspectacular growth. They expect more of the same in the first half of 2017.

"Particularly encouraging is strongly-rising capital investment, a sign both of confidence in the future and of businesses' ability to look beyond political uncertainty.

"If the New Year brings any hangovers they are likely to come from rising cost pressures - brought about by the weaker pound and the National Living Wage - and continued poor export performance."

Prof Graeme Roy, director of the Fraser of Allander Institute, said: "The volume of business activity is at its highest level in over a year with businesses reporting turnover at its highest level in over two years.

"That being said, expectations for turnover and investment are down on the quarter suggesting that the outlook for 2017, whilst improved, remains uncertain."

Source: BBC News - Scotland

Fraser of Allander Budget Commentary: Finance Secretary Raises Revenue to Invest in Public Services

Economists suggest this revenue-raising budget will fund investment in public services, but will kick some of the more difficult spending decisions into future years

FAI - Academics at Strathclyde Business School's Fraser of Allander Institute, Scotland’s leading independent economic research institute, have been analysing today’s Scottish budget.

Professor Graeme Roy, Director of the Fraser of Allander Institute, commented, “Today’s Budget contained little in the way of new surprises beyond what had been widely trailed in advance.

“The budget contained a number of policies designed to boost economic growth including cuts to business rates, and with Scotland currently growing at around one third of the UK, the Government will be hoping these policies have an immediate impact. 

“The major announcement was an increase of around £270m in the spending power of local authorities. This is made up of a mix of higher revenues from council tax increases of up to £180m, new spending linked to commitments on educational attainment and childcare, and the allocation of money from the health budget to support implementation of the living wage for care workers.

“But by setting out spending plans for just one year, and with significant real terms cuts coming down the line, a lot of the hard choices have been left for another day.

"Next year’s budget is forecast to rise slightly in real-terms, but further cuts are planned for 2018-19 and 2019-20 of just over 3% in real-terms. Where these cuts will fall remain unknown.

“The centrepiece of Mr MacKay’s Budget statement was confirmation that the Scottish Government plans to set a different income tax policy to the UK – the first time since devolution that Scotland’s major tax power will be used.

“From April 2017, Scottish taxpayers will start paying the 40p higher rate of tax on incomes above £43,430, compared to a UK threshold of £45,000.

“There are two ways to view this.

“On the one hand, the Scottish Government is not actually taxing people more than they were last year – provided their earnings rise with inflation – but instead not passing on a tax cut that is being implemented elsewhere in the UK.

“On the other hand, it is now the case that middle-to-high earners in Scotland will face a higher tax burden – of around £300 per annum (or just over £25 per month) - than people earning exactly the same amount elsewhere in the UK.

“In 2017-18, this income tax policy is expected to raise an additional £79m for public services. This is less than the government forecast back in March.

“Whilst a relatively small change next year, the Scottish Government also announced their intention to continue with this policy up to 2020-21, so the gap between Scotland and the rest of the UK will widen over time. By 2020-21, Scottish higher rate taxpayers are likely to be paying an additional £700 per year (or around £60 per month) more in income tax than the rest of the UK.

“This is part of an overall effort by the Scottish Government to raise the size of its budget to support public services, and to take a different path from the rest of the UK. The flipside of course is higher tax bills. For a family with one higher earner in a band G council tax property, this will amount to a combined tax increase of over £600 in 2017-18.”

Source: University of Strathclyde, Fraser of Allander Institute

Scotland's Social Enterprise Strategy Launched

Scottish Government - Scotland’s social enterprises can add to their £1.68 billion economic value by accessing global markets, Communities and Equalities Secretary Angela Constance has said.

Scotland’s first ever dedicated, long-term, Social Enterprise Strategy has been published and includes a number of steps aimed at growing a sector and driving inclusive growth over the next decade.

Ms Constance launched the plan at the Grassmarket Community Project in Edinburgh and as an early action announced £140,000 to expand the Social Entrepreneurs Fund to help individuals who want to set up and run a social enterprise.

The sector in Scotland is seen as a world leader thanks to sustained investment and support for social enterprises, which trade for the common good and work to strengthen communities, improve people’s life chances or protect the environment.

The strategy has been developed with the social enterprise sector with the help of local government, and will help local communities who want to start their own enterprise as well as continue to support and grow those already operating.

It will also increase the number of disabled social entrepreneurs and look at ways to enable social enterprises to employ more disabled people, including the use of targeted wage incentives.

Ms Constance said:

“Social enterprises have fantastic potential in terms of economic benefit, currently contributing £1.68 billion to our economy and providing employment opportunities. We want to release that potential and allow them to thrive.

“They are inclusive by their very nature and we know that profits are reinvested back into the project or the local community. That then contributes to the wider economy which is of course is a key priority for this government.

“We’ve worked with the social enterprise sector to develop a strategy based on first-hand experience so we know what’s needed to help the sector grow and continue to succeed. By doing so, we can open them up to wider national and global markets and help boost our economy and drive inclusive growth.

“This will direct our action over the next decade and we will work collectively to push forward social enterprises and allow social entrepreneurs to turn their ideas into reality and contribute to a fairer, more equal and inclusive Scotland.”

In a joint statement, Pauline Graham, CEO of Social Firms Scotland, Aidan Pia, Executive Director of Senscot and Fraser Kelly, Chief Executive, Social Enterprise Scotland, said:

“Scotland is a recognised world leader in social enterprise support and development. The journey towards the launch of this ambitious strategy has been both rewarding and challenging.

“Our social enterprise community, stretching across every area of urban and rural Scotland, is diverse. This new strategy sets out a clear, powerful and inclusive vision for the growth of social enterprise over the next decade and beyond.”

Source: Scottish Government

The strategy document can be accessed in the library section of the EDAS website. 

OECD Publishes “Job Creation and Local Economic Development 2016” Report

OECD LEED - This second edition of Job Creation and Local Economic Development examines how national and local actors can better work together to support economic development and job creation at the local level. 

It sheds light on a continuum of issues – from how skills policy can better meet the needs of local communities to how local actors can better engage employers in apprenticeships and improve the implementation of SME and entrepreneurship policy. It includes international comparisons that allow local areas to take stock of how they are performing in the marketplace for skills and jobs. 

It also includes a set of country profiles featuring, among other things, new data on skills supply and demand at the level of OECD sub-regions (TL3).

Read report here.