John McLellan: Experts suggest Scots workers are lions led by donkeys

We have the developed world's most skilled workforce, but still the economy struggles and '˜low levels of management quality' could be one reason why, writes John McLellan.

Scotlands Adam Smith, who invented modern capitalism

Without reading American author Arthur Herman’s bestseller “How the Scots Invented the Modern World”, most Scots are familiar with the gist even if it’s only from those “Wha’s like us?” tea-towels on sale in Royal Mile tourist traps.

Television, the telephone, the steam engine, the thermos flask, penicillin; we can proudly roll off a long list of Scottish inventions and discoveries from the mid-18th Century onwards. More recently are Dolly the Sheep and the Higgs’ boson, work carried out at Edinburgh University although Doll’s creator Sir Ian Wilmut is from Warwickshire and Professor Peter Higgs a Geordie.

Historian Herman has no known connection to Scotland other than a fascination about how a poor country on the periphery of Europe managed to have such a significant impact on the development of the Western World. Having four universities helped, but in a nutshell the foundations were laid after the Reformation by the development of universal public education through the Church of Scotland’s parish network, which meant that by the 18th Century the average Scot could read, write and count while the masses of most other European countries were largely illiterate.

Political union in 1707, the end of over 100 years of internal religious and constitutional strife with the defeat of the 1745 Jacobite Rebellion, and the rapid expansion of the British Empire between 1714 and 1763 opened up global opportunities for the skills and knowledge Scots had in abundance.

So what’s this got to do with today? The rest of the developed world caught up generations ago and far from being a global leader in education, year after year the Programme for International Student Assessment (PISA) has demonstrated a steady decline to the point now where Scotland is below international averages, particularly in science. The Scottish Household Survey published this week showed that satisfaction with local schools is down to 70 per cent, by some way the lowest since the data was first collected in 2007.

Presenting her Programme for Government this week, First Minster Nicola Surgeon was once again at pains to emphasise the priority her administration puts on education and training. “Closing the attainment gap and raising standards in our schools remains the overriding mission of this government,” she said, knowing the data suggests the mission continues to prove stubbornly impossible.

Her speech led with a focus on the economy, with a pledge to expand the modern apprenticeships scheme and produce a new skills action plan. The link between education and economic output was emphasised in this week’s “Wealth of the Nation” report from the David Hume Institute, which concluded that a prominent focus on skills was essential to kick-start a Scottish economy which had stalled for over a decade.

The report was produced in co-operation with Strathclyde University’s Fraser of Allander Institute and funded by the Scottish Policy Foundation which has former SNP deputy leader Angus Robertson on its advisory council.

The paper shows that despite relatively low educational achievement, Scotland has the most skilled workforce of the developed countries in the Organisation for Economic Co-operation and Development. This suggests three possible explanations: maybe we are good at playing post-school catch-up in the workplace or in tertiary education; perhaps we attract a lot of expertise from elsewhere, like Peter Higgs and Ian Wilmut; and then there is David Hume director Jane-Frances Kelly’s view that skills are not being matched with opportunity.

“Despite a skilled workforce and no shortage of strategies, Scotland’s productivity performance underperforms compared with many advanced economies,” she wrote. “While the Scottish workforce is well-educated, it is not clear we make the most of it, given our relatively low levels of management quality and our high concentration of small, lower-productivity firms,” she wrote.

Poor management quality rarely features in discussions about training, the focus usually being on school-leavers and graduates like this week’s Programme for Government. It implies that however effective our post-school training might be, it only goes so far, and indeed continuous professional development is too often seen not as a staff motivation and retention tool but at best a box-ticking exercise or at worst a costly way to enhance the prospects of key staff landing better jobs with rivals.

That Scotland has a problem at management level was also illustrated by the Scottish Fiscal Commission’s report that tax receipts were £500m below target because the number of higher band tax-payers has been over-estimated.

It shouldn’t be a surprise that if educational attainment is proving hard to improve then the economy will be too, but the First Minster painted a different picture of Scotland’s economic performance. “Economic growth in Scotland over the past year has been higher than in the rest of the UK,” she said. “Exports of goods have increased by 12 per cent – the fastest growth of any UK nation.”

Ms Sturgeon will be well aware of the international comparisons, and it would be too much to expect a focus on negatives in a speech designed to gee up the troops for the year ahead, but only making comparisons with the rest of the UK invites complacency. Similarly, at a local level in Edinburgh, the city council’s recently revived Edinburgh Economy Watch is a useful document for gauging progress against other UK cities but gives little indication about international competition.

On the other hand, the Hume report is all about global comparisons and the verdict is damning. “There has been little employment growth in our most productive industries,” it says. “Business investment is relatively low, as is research and development spending; we export less than the EU and OECD averages, from a narrow base of industries and firms.”

Ms Kelly offers no quick fixes, quite the opposite, but plenty of sage advice. A focus on evidence to understand the problem; consensus and collaboration across political divides and political cycles, and a prominent focus on skills are but three. “The population of Scotland will need jobs, and that focusing on the drivers of productivity that increase people’s skills and access to jobs will also increase opportunity,” she said.

Yet as Finance Secretary Derek Mackay scrambles to fill the £500k higher-band income tax hole, there is an increasingly vocal minority which challenges the need for growth and is dismissive of warnings about the effect of ramping up taxes on the better off. Some of them are in the City Chambers, where just across the High Street sits the statue of Adam Smith, the Kirkcaldy man who gave the world modern capitalism.