Productivity index launched

Call for investment in skills and wellbeing to boost output

Tracy Black

Tracy Black: fresh insights and urgency (pic: Terry Murden)

Investment in digital skills and more help for mental health sufferers are among new measures proposed to boost Scotland’s flagging productivity.

CBI Scotland and KPMG have launched an annual Scottish Productivity Index to help find solutions to a chronic problem of low level output.

The index will examine 15 underlying indicators that track Scottish performance, based around four broad areas: business practices, skills and training, health and wellbeing and infrastructure and connectivity.

It has found that nine of these indicators show Scotland falling behind other parts of the UK or international competitors.

Official data shows Scotland is ranked 16th in the OECD rankings which sees the country behind competitors such as Ireland, Sweden, Finland and Iceland, as well as the UK as a whole.

Scottish productivity decreased by 0.6% for the quarter between April to June 2019 compared with the same period last year. Labour productivity in the UK fell by 0.2%. Before the 2008-09 financial crisis, UK productivity was growing at 2.3% per year.

The Scottish Productivity Index is unveiled two weeks after the Scottish Government and Scottish Council for Development and Industry launched two pilot Productivity Clubs designed to help businesses through sharing advice, experiences and knowledge. 

Those behind the index, including the Fraser of Allander Institute, Mark Diffley Consultancy and Research and a business advisory group, recommend setting a target for 100% of the workforce to have basic digital skills by 2025. They want mental health to be recognised as a factor in productivity and for services to be prioritised and properly resourced.

However, since the financial crisis firms have employed more low-skilled and lower paid workers which in turn are blamed for contributing to low productivity. Howard Archer, the chief economic adviser to the EY Item Club, said low wage growth had persuaded firms to hire more staff rather than invest in technology over the past decade.

Tracy Black, CBI Scotland director, said the index is “something we think can bring fresh insights and urgency to the debate about how to get Scotland’s economy firing once again.

I’m confident that by benchmarking progress in this way, we can find solutions

– Tracy Black, CBI Scotland

“Brexit aside, boosting weak productivity has been the main focus of CBI Scotland’s work over the past few years.

“While these findings show that Scotland starts some way behind when it comes to certain productivity measures, we also know that progress is being made. I’m confident that by benchmarking progress in this way, we can find solutions to deliver the step-change Scotland desperately needs.”

She said that the latest insights and analysis to chart progress will give the country “a real chance of addressing a stubbornly persistent issue and deliver more jobs, higher wages and future prosperity across the whole country.”

Jenny Stewart, KPMG partner and chairman of the business advisory group said: “Tackling the productivity challenge could unlock thousands of pounds in higher annual earnings for the average worker and create a more competitive country.”

The CBI/KPMG Scottish Productivity Index represents the next phase in CBI Scotland’s ongoing campaign to boost productivity across all parts of Scotland and follows the publication of 2017’s landmark Pursuing Prosperity report.

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