Productivity must rise if any green shoots are to grow

Published on Thursday 28 May 2009 20:20

IN the 12 months to March this year, 20,000 women in Scotland withdrew from the workforce, according to new Scottish Government figures published today. This is not just a graphic illustration of the mounting human cost of the recession. It is also an indication that the economic model which underpinned the Scottish economy for the past decade is now broken beyond repair. It may be time to think about a new model, rather than trying to put Humpty Dumpty back together.

In recent years the Scottish economy has differed markedly from that south of the Border by having a very high participation rate – i.e., a much larger proportion of adults were in work than in England, in particular among women. One basic reason for this is that productivity in Scotland is poorer than in England, forcing companies to use more labour, especially females working part-time in service industries. Another reason is that wages are generally lower north of the Border, meaning working families usually require at least two incomes to maintain a reasonable standard of living. The result was that Scottish living standards remained close to the national average.

However, the recession and the credit crunch have combined to undermine this set-up. New Scottish Government data predicts that not only is unemployment going to go on rising for some years, there will also be a significant number of people (many of them females) withdrawing from the labour market permanently. The impact on standards of living will be serious. Indeed, with bank lending still constrained, especially for smaller companies, Scottish Government officials now think it likely that the economy will under-perform the UK, and be later to climb out of recession. The loss of 700 jobs at Hewlett-Packard in Erskine is graphic evidence of this long-term trend.

This analysis, coupled with last week's gloomy statement from Mervyn King, the Governor of the Bank of England, suggests that any "green shoots" in the economy could be killed off by next winter's unemployment frost. Yes, there is a reasonable likelihood that manufacturing output could bounce back, now that stocks have been used up. But any rise in output is unlikely to be accompanied by more workers being hired. And, as we report today, there is going to be fierce regional competition for any new business activity, especially when the financial services sector is restructured. Edinburgh, for instance, may lose service jobs to places such as Leeds and Manchester.

There will be no return to the economic status quo in Scotland. To remain competitive, and to boost wages, we need to raise productivity to international levels, painful as that may be. We need to stake out competitive advantage in new industries, not simply try to hang on to what we have. And Scotland's over-dependence on public service jobs, while a crutch in hard times, may not be the best use of resources if we want to improve economic efficiency for the long run.

More MPs should go to cleanse Westminster

THE announcement by Conservative MP Julie Kirkbride and Labour MP Margaret Moran that they will stand down at the coming general election is not a surprise. What is amazing is just how long it took both politicians to realise their position was untenable, given the scandal of their expense claims.

Ms Moran, who claimed 22,000 to cure dry rot in her partner's home – which was neither in London nor in her constituency – said she was quitting "with great sadness". Whether this referred to her loss of access to the parliamentary gravy train, or was evidence of genuine contrition, is hard to say.

Ms Kirkbride was in trouble for employing her sister as a secretary – though her sibling lived 100 miles from the constituency; and for using taxpayers' money to build an extension to her "second" home in order to put up her brother (who paid no rent).

The fact that there are still such elected members who believe they have done no wrong, or who blame the Fees Office for their own lack of judgment, suggests we need even more MPs stepping down, or being deselected by their parties. The speed limit on the road ahead may say you can drive at 70mph, but you are either a fool or a knave if you do so in the fog. The MPs' expenses rule book was far too lax, but those who took advantage of that to shake down the taxpayer did so deliberately. They do not deserve our sympathy. They should go in order that parliament can be cleansed.

Ignore the hype and support true talent

HAS Scottish singing sensation Susan Boyle lost her cool? Has she succumbed to the pressures of fame brought on by receiving 100 million hits on YouTube and doing personal appearances on Oprah and The Simpsons? Did she make a two-fingered gesture at a hotel television showing her 12-year-old rival, Shaheen Jafargholi? Has she threatened to quit the hit reality show, Britain's Got Talent (prize: 100,000) before the contest ends?

Has Piers Morgan, one of the judges and a former tabloid editor, waded in to defend Ms Boyle because he is a sensitive man who always supports fair play? Or could it just be that the finals of Britain's Got Talent are on Saturday and having Susan continuously in the media spotlight is a good way of bumping up the audience?

Britain has always loved TV talent shows. Hughie Green's Opportunity Knocks attracted 18 million viewers – three million more than Britain's Got Talent. Hughie was responsible for discovering the likes of Mary Hopkin, Les Dawson, Bonnie Langford, Little and Large, Lena Zavaroni, Frank Carson and Pam Ayres. Of course there was the famous time the Opportunity Knocks audience chose as the winner Pete the Plate Spinning Dog. We like to think, had YouTube been around, Pete would have got at least 100 million hits.

We wish Susan good luck!