Prosperity Unlocked – How can Scotland unlock its potential and solve the productivity puzzle?
Scotland Productivity Forum Research Assistant Daniel Williams writes about Bart van Ark’s appearance on Prosperity Unlocked, a new podcast series from Prosper, a leading Scottish economic alliance. The episode explores the key challenges Scotland faces in boosting productivity—and what both businesses and the government can do to drive growth.
Cracking the productivity conundrum: how innovation can drive growth
Productivity is one of Scotland’s most pressing economic issues. The conversation centres around the barriers and opportunities that Scotland faces in increasing its productivity and innovation, while offering valuable insights for both businesses and policymakers.
What is productivity—and why does it matter?
Many people think productivity is about working longer or harder. But as Bart explains, it’s about working smarter. Productivity measures how efficiently we transform resources—whether labour, technology, or capital—into better outcomes for businesses and society. It’s not just an economic metric, but a driver of better living standards and the key to sustainable growth in Scotland.
Scotland’s unique productivity challenge
For over a decade, the UK—including Scotland—has experienced stagnating productivity, particularly since the 2008 financial crisis. While Scotland’s productivity levels are similar to the UK average, there’s a notable issue: Scotland achieves this with less overall output growth and fewer hours worked. This underutilisation of resources creates a unique challenge for Scotland’s economy. What holds Scotland back, and how can these hurdles be overcome?
Key areas for improvement
Several areas are critical for Scotland to address to improve productivity and drive innovation:
- Technology and digital adoption
Embracing digital transformation—especially artificial intelligence (AI)—is key to boosting business productivity. But technology alone isn’t enough. It must go hand-in-hand with investment in workforce skills to effectively integrate new technologies. - Workforce skills
Scotland has a strong foundation in education, particularly in higher education with world-class universities. But there is a gap in vocational and technical skills. Bart stresses the need to improve intermediate qualifications and spread the benefits of education across different sectors. - Management and leadership
Effective management is critical for driving productivity and businesses need leaders who can create a culture of innovation and adaptability. Leadership plays a key role in integrating new technologies and motivating workers to contribute effectively. - Regional disparities
One of the most striking points raised in the podcast is the significant difference in productivity across Scotland’s regions. Cities like Edinburgh perform much better than others, including Glasgow and other cities in the Central Belt. Bridging these regional gaps will require targeted policies and investments to ensure that underperforming areas can catch up.
Collaboration between business and government
While businesses are often seen as the main drivers of productivity, the government has a crucial role to play in creating an enabling environment. This includes everything from better regulations to improved access to finance, as well as fostering innovation ecosystems. Bart highlights the importance of government coordination, suggesting that a statutory growth and productivity institution could help address the cross-sector challenges Scotland faces.
The role of SMEs and peer-to-peer learning
Small and medium-sized enterprises (SMEs) often struggle the most with adopting new technologies and management practices, but they also stand to gain the most from improved productivity. As the episode highlights, peer-to-peer learning can be a powerful tool for these businesses, as sharing experiences and knowledge helps SMEs overcome common hurdles.
Public sector productivity and the need for reform
Scotland’s public sector—especially healthcare and education—plays a pivotal role in shaping overall productivity. Efficient public services create a healthier and better-educated workforce, which in turn boosts private sector productivity. Bart discusses how reforms in the public sector, particularly through digital transformation, could significantly increase efficiency and drive broader economic growth.
The future of work: hybrid and remote models
As the world adapts to the changes brought by the pandemic, hybrid and remote work models have become far more common. The podcast explores how businesses need to find the right balance between in-office collaboration and remote flexibility. While the impact of remote work on productivity is still being debated, one thing is clear: flexibility is key. Companies that can combine the benefits of both models will be better positioned to innovate and maintain employee well-being.
Key Takeaways
- Productivity isn’t about working harder—it’s about working smarter. Scotland needs to make the most of its resources by driving innovation and efficiency.
- Disparities across Scottish regions and underutilisation of resources are major challenges. Bridging these gaps will be crucial to Scotland’s economic success.
- Technology adoption and skills development must go hand in hand. Businesses need to invest in both areas to increase their productivity.
- Good leadership and management are essential. Leaders who create cultures of innovation will be key to driving future growth.
- The government plays a vital role. Policies, especially in education, healthcare, and public-sector reform, can significantly impact productivity.
- Hybrid work will continue to evolve. Companies must adapt to maintain innovation while supporting employee well-being.
Unlocking Scotland’s productivity potential isn’t just an economic imperative—it’s a pathway to a more innovative and prosperous future. For more insights into how Scotland can rise to the challenge, listen to the full conversation on Prosperity Unlocked and visiting the Scotland Productivity Forum webpage.
