With productivity rising faster than UK and EU, Scotland has immense economic potential
The UK economy has been in freefall for the best part of a decade as we battle with issues exacerbated by Brexit and the pandemic. Record numbers of absences, increasing unemployment, worsening weather conditions, and the cost of living are all having a huge impact on productivity levels.
After lockdown, more of us are working from home, and businesses requesting a return to the office are facing talent retention issues, as people seek hybrid or remote contracts elsewhere. Faced with this, what steps do we need to take to ‘unlock’ productivity?
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Hide AdProductivity matters: for our economy, living standards, how we conduct business and well-being. The good news is, Scotland has immense potential – and it continues to outperform other UK regions.
Between 2008-2023, Scotland recorded an average annual labour productivity growth of 1 per cent, compared with an average annual growth of 0.4 per cent for the UK, and 0.8 per cent for the EU. Nevertheless, the country needs to improve its skills base, with 69 per cent of employers identifying the need for up-skilling.


Need for greater innovation
Unlocking Scotland’s productivity potential would help businesses in local communities to grow, develop skills and harness diverse talent to create a stronger, more resilient economy. Indeed, a hypothetical rise in productivity of lagging Scottish regions to the UK’s national average for gross-value-added per hour of £38.50, would yield an additional £539 a year for every person.
Through improving productivity, we can also create the healthcare services which enable fuller participation in work and life. This is critical, as the health industry is Scotland’s largest employer, accounting for nearly 15 per cent of total employment.
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Hide AdWith technology reshaping the ways we work, understanding when and where to invest is vital. Our nation’s competitiveness relies on our capacity for innovation and smarter ways of working. Yet the proportion of ‘innovation active’ firms in Scotland is 32.2 per cent compared to 37.6 per cent for the UK.
New technologies and artificial intelligence are often associated with making businesses obsolete, but they also represent exciting new opportunities. Targeted investment has allowed Scotland to lead the way for the UK’s transition to net zero, with renewables generating 113 per cent (more than we need) of Scotland’s gross electricity consumption between 2022-2024.
Investment in decline since 1990s
A better understanding of where and when to invest in technologies can be a game-changer for local businesses, multinationals and the Scottish economy.
Businesses which offer interesting and meaningful work attract workers and retain talent. Creating compelling work conditions also assists businesses as they activate change and navigate through impacts on job roles.
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Hide AdInvestment is critical – but as a percentage of GDP, Scottish business investment, in real terms, has been on an overall declining trend since the late 1990s, and remains lower than 20 years ago.
Productivity can bring about significant improvements in many aspects of our lives. Applying productivity learnings could dismantle regional disparities and revitalise communities, increase skills, provide meaningful work, and boost our national competitiveness and well-being.
So, here’s to a sustained focus on productivity – and achieving improvements that will benefit us and generations to come.
Carolyn Currie is chief executive of Women’s Enterprise Scotland and Bridgette Wessels is a professor in the sociology of inequalities at the University of Glasgow.
Scottish Productivity Week takes place from January 27 to 31.
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