Scotland lagging behind on productivity claims new report

Skill shortages amongst Scotland’s workforce is the “biggest challenge” facing businesses as the country continues to lag behind other parts of the UK in regards to the economy’s productivity, a new report has said.

The Scottish economy is lagging behind its competitors on productivity, a new report has found.
The Scottish economy is lagging behind its competitors on productivity, a new report has found.

The CBI/KPMG Productivity index showed that despite strong performance around the level of education and skills, the overall trend around productivity is not as positive.

It states Scotland is behind its UK and international competitors in nine of 13 productivity indicators, but is showing long-term improvement in eight.

However the report says the country is lagging “seriously behind” in areas such as business investments, exports, and in-work training.

Opposition politicians said the report “lays bare” the damage caused to the economy by the SNP.

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The Scottish Government said the recent budget addressed many of the points in the CBI report.

The Index tracks Scotland’s productivity performance across 15 key indicators, in four categories: business practices; skills and training; health and wellbeing; infrastructure and connectivity.

The report also warns that skills shortage vacancies are considered the “biggest challenge” facing employers in Scotland, which has the “potential to significantly impact productivity”.

This is due to a “perfect storm” of factors including overseas workers leaving during the pandemic and new immigration rules following Brexit being introduced when “firms had very little capacity to adapt and prepare”.

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The report adds these shortages are “holding back our economic recovery at the exact moment we need to be driving it forward” and could take up to two years to resolve.

Reacting, Tracy Black, director of CBI Scotland, said the country has struggled to boost productivity “for decades”, and called on productivity data to guide “tangible and immediate action” to help grow wages and support a “vibrant, sustainable and prosperous economy”.

She added: “While the latest index data shows we are making improvements in some areas, the fact we continue to lag behind domestic and international competitors overall shows the need for rapid remedial action.

"Scotland does a great job in terms of setting ambitious long term economic goals, but businesses desperately want to see swift progress in moving from high level discussion to impactful delivery. Ambition must translate into action now or we risk the gap widening.”

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The Scottish Conservative spokesperson on finance, Liz Smith, said the CBI report underlined “years of financial mismanagement from the SNP”.

She said: “This is at the same time as the most recent Audit Scotland statistics show that the SNP has withheld £580m of taxpayers’ money, which should have been available to help our economy bounce back after Covid.

“It is high time the SNP accepted full responsibility for our economic woes. Scotland deserves far better.”

Labour’s finance spokesperson, Daniel Johnson, echoed the concerns.

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He said: “This report lays bare the damage the SNP have inflicted on our economy.

“We need to get productivity back on track if we are to rebuild, protect jobs and plug the blackhole in public finances.”

Responding, a Scottish Government spokesperson Brexit and the pandemic had impacted Scotland’s economy, and said much of the key issues of the report had been addressed in the 2022/23 budget.

They added: “We share CBI Scotland’s concern about skills shortages and it is clear that the UK immigration system is not currently meeting the needs of Scotland’s employers or communities.”

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