2021 Scottish Productivity Index

In partnership with KPMG and the Fraser of Allander Institute, CBI Scotland has published the 2021 Scottish Productivity Index. The Index tracks Scotland’s productivity performance across 15 key indicators, in four different categories: business practices, skills and training, health and wellbeing, and infrastructure and connectivity.

The updated productivity performance data shows:

• Scotland lags behind other parts of the UK or international competitors in 9 of the 13 productivity indicators for which comparable data was available (down from 11 out of 15 in 2020). This includes business investment, exporting and innovation.
• 4 of the 15 indicators show short-term improvements (down from 6 in 2020). This includes the percentage of people with a Higher Education Certificate or above and the percentage of premises with access to full fibre broadband.
• 8 indicators show progress is being made over the long-term, out of 13 for which relevant data was available (the same number as 2020). This includes early-stage entrepreneurial activity and business R&D spend.

Improving Scotland’s productivity performance is a long-term challenge and remains the only sustainable way of increasing wages and ultimately improving living standards.

While the impact of the pandemic over the last two years has changed the economic landscape, Scotland needs to keep improving productivity to build a stronger economy.

Due to the timing of data availability covering 2020-21, some of the metrics in the productivity dashboard do not yet reflect the full impact of the COVID-19 pandemic on productivity/performance.

The 2021 Productivity Index was also informed by a Business Advisory Group, which added important real-time insights to the data.

Improving productivity requires a collaborative effort between business and government. Whilst highlighting the latest data, the Productivity Index also makes key recommendations for government and firms to help boost Scotland’s productivity performance.

Key recommendations for governments include:

1. Creating a smart taxation environment that rewards business investment, including building on the super deduction and using the business rates system to incentivise investment.
2. Making the Shortage Occupation List more agile and responsive to economic need to help businesses with the immediate challenge of skills and labour shortages which are impacting productivity, and introducing an SME training tax credit.
3. Speeding up the roll out of gigabit capable broadband across the whole country to help firms maximise the benefit of new ways of working and develop a gigabit toolkit to encourage business and consumer adoption.

Key recommendations for businesses include:

1. Committing to increase investment in training, relative to pre-pandemic levels. The heightened competition for talent means upskilling and retraining current staff can provide an advantageous alternative to entering the recruitment market.
2. Accelerate technology adoption plans beyond just remote working and monitor the patterns in office usage to develop a strategic approach to hybrid working that enhances the efficiency of the business.
3. Establish organisational norms that support staff’s mental and physical wellbeing wherever they work and encourage managers to establish a mental health action plan with their teams.

View the latest data on the productivity dashboard.

Read the full 2021 Scottish Productivity Index.