Scottish Budget: Skills investment & boosting business productivity must be a priority, says the CIPD

Commenting ahead of Scotland’s Budget, Marek Zemanik, senior public policy advisor for the UK nations at the CIPD, the professional body for HR and people development, said:

“The Scottish Budget will be a pivotal moment for the Scottish Government to signal how it intends to better support businesses and working people in Scotland, amidst growing financial pressures.

“Although inflation is falling, consumer prices in 2024-25 are expected to be 20% higher than they were just three years ago, which is continuing to pose significant challenges for businesses and working people across Scotland.

“The increases to the national minimum wage and to employer National Insurance contributions, announced in the UK Government’s Budget, alongside the raft of changes planned to employment regulation, could also stall growth in Scotland and deter employers’ hiring plans."

Raising productivity is key

"Given this ‘perfect storm’ of pressures, it’s more important than ever that the Scottish Budget sets out how the Government intends to work with employers to bolster productivity – particularly across lower wage sectors - in Scotland.

“This should involve making changes to public policy in key areas such as skills, innovation and business support to encourage employers to invest more in their workforce and adopt the latest technologies to boost productivity in their organisation.

“Publicly funded business support should be reviewed as a first step towards the creation of accessible and high-quality business and HR support services that can help more small-to-medium sized businesses develop the capabilities needed to innovate and grow."

Skills and training need a boost

“Scotland urgently needs a more effective skills system, especially following the withdrawal of key upskilling programmes in recent years – such as the Flexible Workforce Development Fund and Individual Training Accounts. The Scottish Government needs to do more to support apprenticeships, work-based learning, and lifelong learning, all of which is crucial in the context of our ageing workforce and demographic and industrial changes.

“Vocational and technical skills development routes must have a more significant role in public policy too. For example, we know that apprenticeships that combine on-the-job training with vocational qualifications have the potential to significantly reduce the gap between skills demand and supply.

“The UK Government’s proposals to reform the Apprenticeship Levy into a new Growth and Skills Levy are an opportunity to ensure it works better in a devolved context, to help unlock more apprenticeships for young people. But it is up to the Scottish Government to protect apprenticeship funding, boost upskilling programmes and incentivise smaller businesses to invest in skills that will support their current and future workforce needs.

“Employer investment in training also needs a considerable boost. Public policy should serve as an enabler and not a barrier to this.”

Healthy workforce

“Given our levels of economic inactivity due to ill health, it is clear that health policy and economic policy are interlinked. We also know from CIPD research that employee sickness absence is already at its highest level for the past decade, with UK employees absent an average of 7.8 days in 2023, compared to the pre-pandemic rate of 5.8 days.

“To help alleviate this, there must be a strong focus from the Scottish Government on improving access to occupational health services for those in work. This will ensure that health conditions can be addressed early on, so fewer people fall out of work due to health conditions or a disability.”

Broader plan for growth needed

“Significant public sector pay awards have provided a welcome boost to public sector employers and workers. However, the Scottish Government needs a broader plan for growth that includes boosting private sector business investment in workplaces across Scotland.

“This will undoubtedly be a difficult Budget, under challenging circumstances. But boosting business productivity across all sectors, and investment in skills and innovation must be high up the list.”