Challenges ahead to build a strong, sustainable workforce fit for future

While Barry McKeown, head of real estate in Scotland, was part of an influential panel that discussed Solving Scotland’s Housing Crisis, as an employment lawyer I spoke about Scotland’s workforce now, and where it needs to be in 2050 if Scotland is going to have a strong, sustainable economy.

The discussion in the room highlighted the disconnect between the main stakeholders about how to build a sustainable economy for the next 25 years. It was felt that Scotland is spreading its scarce resources too thinly and needs to decide what sectors are going to form its economic USP in 2050.

Scotland can’t win in every sector. Therefore, the approach has to be more focused and targeted. For example, to build an economy around tech, energy and infrastructure, the workforce and skills must be in place to achieve this aim. Equally, if we are going to continue to pursue our historical strong suits such as in tourism and food and drink, we must ensure the skills base is sufficient to sustain growth in these sectors.

The heart of a strong, sustainable economy is a skilled, healthy, motivated workforce. In my opinion, the question of whether Scotland will have that in 2050 hinges on how it responds to the evolving pressures of technology, mental health, and post-pandemic realities. There are significant challenges to overcome. An estimated 810,000 Scots aged 16 to 64 were economically inactive from 2023 to 2024. Scotland is too small an economy to sustain that level of non-contribution from such a large proportion of the working population.

Furthermore, Artificial Intelligence (AI) is already re-shaping Scotland’s employment landscape. While fears of job displacement persist, history shows that technological advancement tends to shift rather than eliminate employment.

AI should complement the way we work, rather than diminish it. The real challenge therefore lies in ensuring that skills evolve to meet emerging demands.

Scotland is facing a digital skills shortage. It is estimated that this annually costs the UK economy £23 billion with the cost to Scotland in excess of £3bn. Without a robust national strategy to upskill workers, especially in sectors like energy, technology, and infrastructure, our workforce risks falling behind. Investment in training is essential to ensure Scottish workers develop and retain the necessary skills to work competently in these growth sectors in 2050.

The post-pandemic workplace has seen a marked shift with the rise of home/flexible working. It remains to be seen whether in the medium and long term this will have a positive or negative effect on economic output. I believe there’s also a sense of entitlement within sections of the workforce who baulk at being asked to come into the office. Indeed, efforts at cracking down on hybrid working have been largely unsuccessful, with many employees choosing to switch to an employer who permits homeworking.

Moreover, since the pandemic, employees have become more litigious and challenging towards employers. Employer expectations are rising year on year. 47 per cent of UK employees in 2024 saw their job as “just about the money” which is up from 38 per cent in 2019. It’s notable that only 51 per cent of employees said they would work harder than needed to help their employer.

Good health and mental health are pivotal for workforce sustainability. In 2022, 17.7 million workdays were lost to sickness absence in Scotland with more than 20 per cent of these attributed to mental health. Scotland is experiencing a growing mental health crisis, the effect of which professionals believe could last a generation. Whilst the Scottish Government is introducing new Core Mental Health Standards to ensure consistent, high-quality care, demand is rising. To maintain a productive and resilient workforce, we are going to have to understand and address the root causes of stress. Our workforce is ageing and there needs to be a focus on how that ageing workforce can be helped to remain healthy and productive.

In summary, there are significant challenges for Scotland in building a strong, sustainable workforce for the future. Our politicians, business community, local government and further and higher education institutions must come together to decide on our economic priorities over the next two decades and then assess how we are going to produce a skilled, stable workforce to succeed in these sectors.

Michael McLaughlin is an employment partner, Shoosmiths