You can read our full submission here.
Disability and health are key issues for all small businesses – whether the owner is disabled or has health issues themselves or has employees who are/do. FSB research shows that small businesses are more likely to employ disabled people than larger businesses, as well as people over 50, who are more likely to have a health condition. Disabled people are also self-employed at a higher rate than non-disabled people.
Despite the better performance of small businesses when compared to larger employers, disability employment still lags significantly behind non-disabled employment across all sizes of employers.
In April 2022, FSB published a report ‘Business Without Barriers: Supporting disabled people and those with health conditions in the workforce’ which outlined how important disabled-owned small businesses are to the wider UK economy. Some of the key findings from the report demonstrate the progress that has been made by small business owners in addressing a more inclusive labour market across the UK:
- 25% of small business owners are disabled or have a health condition (20% in Scotland)
- 51% of employers have employed a disabled person or someone with a health condition in the last 3 years
- 91% of small employers offer flexible working, rising to 97% of those who employ a disabled person or someone with a health condition
- 54% of small business employers believe the government should cover SSP costs or should implement a full rebate for small businesses
- The cost of sickness absence last year for small business employers was £5bn
- 23% of disabled people or those with a health condition have experienced discrimination or negative treatment
- 52% have experienced a barrier due to their being disabled or having a health condition
Working to tackle this is not only a moral imperative but would also support businesses facing recruitment and skills shortages.
What are the remaining challenges, and why has progress been difficult?
In 2016, the Scottish Government set a target to at least halve the Disability Employment Gap (DEG) by 2038.
In April 2020-March 2021, the employment rate for the disabled population was estimated at 47.4 per cent which was significantly lower than the employment rate for those not classed as disabled (80.2 per cent). In April 2020-March 2021, the disability employment gap was 32.8 percentage points. Evidence of the impact of COVID-19 on labour market outcomes of disabled people is still emerging, but it is clear there are indicators from the latest data that the disability employment gap is starting to widen.
There are very few employability programmes specifically designed for people with disabilities. The take up of mainstream employability programmes, such as Fair Start Scotland, by people with disabilities has been historically low. In addition, many of these programmes are vulnerable to fiscal uncertainties on the part of the providers, as they tend to be underpinned by a payment by results model.
Entrepreneurship
FSB have found there is a particular lack of support for encouraging entrepreneurship amongst disabled workers.
There are a multitude of reasons why a disabled person or someone with a long-term health condition may become self-employed or establish their own business. Our research found that some opt for self-employment because of the lack of appropriate employed opportunities for them, while many have chosen the freedom and flexibility working for oneself brings. Scotland has a lower proportion of disabled business owners (20%) than the rest of the UK (25%) despite the Scottish Government’s aim to establish Scotland as a world-class entrepreneurial nation.
Disabled entrepreneurs may face additional barriers compared to nondisabled entrepreneurs. FSB research showed that the greatest challenge reported across the UK by those who are disabled or who have a health condition is not being able to commit to consistent hours or meet short deadlines (34%). This was followed by issues when applying for financial support (15%), not getting access to equipment (11%), and not finding peer-to-peer networks (11%). Only 42 per cent of all disabled business owners had not experienced any additional barriers to their business as a result of their disability or health condition.
Small business owners who are deaf or have hearing loss in particular reported barriers and difficulties getting support to overcome these. While these business owners felt supported by the NHS, this support did not extend to working or setting up and running a business.
Disabled entrepreneurs and those with a health condition are less likely to have used business support than those without – 41 per cent have not used any support compared to 35 per cent of those with no disability or health condition. They are particularly unlikely to have used professional business advisors, e.g., accountants (20%), banks (11%), and local authorities/councils (8%), which raises questions around accessibility of these services
Policy Measures
The Committee asked for measures, and we recommended a number of policy actions to support disabled people and employers to increase participation rates in the labour market.
There are clear economic, social and health benefits of entrepreneurship by disabled people across the UK. The Scottish Government, as part of their National Strategy for Economic Transformation, and A Fairer Scotland for Disabled People employment action plan, should:
- Deliver increased support to target higher number of disabled entrepreneurs.
- Increase business support for disabled entrepreneurs.
This should be a key priority under the NSET programme aimed at Creating a Fairer and More Equal Society.
FSB research shows that disabled entrepreneurs are less likely than non-disabled entrepreneurs to use banks as a form of business support. Many banks have undertaken a considerable amount of work to increase accessibility and provide protection for vulnerable customers and should be commended for doing so. Collecting and publishing data on the proportion of loans granted to disabled entrepreneurs would be a hugely important continuation of this work, with this in mind we think there is an opportunity for the Scottish National Investment Bank to have a role in supporting disabled entrepreneurs:
- The Scottish National Investment Bank should measure and publish the proportion of loans given to disabled entrepreneurs.
Conclusion
The reasons for poor levels of disability employment are complex and include issues such as lower educational outcomes for disabled people, the inaccessibility of essential infrastructure such as transport, direct and indirect discrimination from employers, colleagues and customers, and the impact on performance at work or running a business that ill health can have. Because of these complex reasons, work is needed to incentivise recruitment of disabled applicants; otherwise, previous disadvantage risks becoming a permanent penalty.
It is clear narrowing the disabled employment gap cannot be delivered alone, and other key stakeholders, including small businesses, can and do play an important role in creating a more inclusive working environment.