{"id":8531,"date":"2019-05-30T12:29:53","date_gmt":"2019-05-30T12:29:53","guid":{"rendered":"https:\/\/sceptical.scot\/staging\/?p=8531"},"modified":"2026-04-18T19:34:31","modified_gmt":"2026-04-18T19:34:31","slug":"what-does-the-recent-failure-to-improve-scotlands-productivity-ranking-tell-us","status":"publish","type":"post","link":"https:\/\/sceptical.scot\/staging\/2019\/05\/what-does-the-recent-failure-to-improve-scotlands-productivity-ranking-tell-us\/","title":{"rendered":"What does the recent failure to improve Scotland’s productivity ranking tell us?"},"content":{"rendered":"\n

Essentially, productivity is the output produced by a single unit of labour. Given a fixed workforce, and adjusting for inflation, the economy grows by each worker (or working hour) producing more output, i.e. by productivity rising. <\/strong><\/p>\n\n\n\n

This in turn allows for wages (and living standards) to rise, as each worker is producing more and so can be rewarded more.<\/p>\n\n\n\n

So how has Scotland been performing, in both absolute\nand relative terms, with respect to this very important measure?<\/p>\n\n\n\n

Scottish productivity data<\/h2>\n\n\n\n

Recent Scottish Government and ONS publications have\nprovided estimates for Scottish  and UK\nproductivity in 2018. This suggests yet another poor year for the UK, +0.5%,\nbut an unexpected boost for Scotland, +3.8%. The rise in Scottish productivity\nis dominated by a fall in hours worked (-2.3%) alongside a small rise in output (+1.4%).<\/p>\n\n\n\n

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However, alternative \u2018hours worked\u2019 data for Scotland, based on the Annual Population Survey, show a rise in hours worked (+0.6%) in 2018, as opposed to a fall (-2.3%), which would result in a much smaller improvement in productivity.<\/p>\n\n\n\n

In terms of the past 20 years, the annual productivity\ngrowth for Scotland averaged 1.5% from 1998 to 2007, the pre-Great Recession\nperiod, while more recently (2013 to 2018) it has fallen to 0.8%. Similar\nanalysis for UK productivity shows a slowdown from 2.1% a year (1998 to 2007)\nto 0.7% (2013 to 2018). Although Scotland\u2019s\nproductivity growth of late has been marginally above that seen for the\nUK, this advantage is wholly down to the improvement seen in 2018, over which\nsome doubts exist.<\/p>\n\n\n\n

Analysis of productivity growth by industrial sector\nshows that some sectors experienced unusually high growth in 2018, including\nin: Manufacturing (+8%); Transport & Storage (+12%); Hotels & Catering\n(+13%); Administrative & Support Services (+9%); and Other services (+17%).\nSuch big shifts in sectoral productivity are unexpected but not uncommon in\nScotland.<\/p>\n\n\n\n

In all but one of these high growth sectors the\ncomparable productivity change at the UK level was much lower, at 1% or less\nand in all of these sectors the majority of the rise was due to fall in\nhours worked, as opposed to an increase in output.<\/p>\n\n\n\n

Reasons why the \u2018hours worked\u2019 might change include:\nmore\/fewer jobs; a shift to\/from part-time vs full-time; and longer\/shorter\nworking hours per week. Workforce jobs\ndata suggests that any change to the number of jobs in 2018 does not explain\nmuch of the productivity change. This suggests that changes in work patterns\nwere the primary source of falling \u2018hours worked\u2019. However, annual changes on the scale recorded seem unlikely and so\ndoubts must be harboured over the reliability of the disaggregated \u2018hours worked\u2019 data.<\/p>\n\n\n\n

Overall, the published productivity figures suggest that, at both an aggregate and at a disaggregated level, the results for Scotland are much more \u2018noisy\u2019 <\/a>than for the UK, which is mainly due to higher uncertainty with regards to the regional labour market data, probably connected to sample size levels. This heightened uncertainty makes it very difficult to draw strong conclusions over Scotland\u2019s recent productivity growth performance in relative terms. However, in absolute terms, like the UK, recent growth has been poor.<\/p>\n\n\n\n

International Productivity Rankings<\/h2>\n\n\n\n

Reflecting the importance of productivity, the Scottish\nGovernment set itself the target, back in 2007, of \u2018an improvement in Scottish productivity to rank in the top quartile of\nOECD countries by 2017<\/em>\u2019. However, the latest figures show Scotland\u2019s\nranking amongst OECD countries to be unchanged, at 16th, since 2007, towards\nthe bottom of the second quartile.<\/p>\n\n\n\n

But how realistic was this target in the first place?\nAnalysis of the productivity scores and rankings of 37 comparator countries\nhighlights a number of key points:<\/p>\n\n\n\n