The next first minister has been urged to prioritise economic progress as a report reveals Scotland’s overall productivity growth has slowed.
The Scottish Chamber of Commerce (SCC) has written to SNP leadership candidates – one of them the next first minister – to ask them to commit to removing existing legislation which increases the cost of business while reforming business rates.
It comes as the fourth annual edition of the CBI-KPGM Scottish Productivity Index reveals Scotland is still falling short on leading indicators, despite making some progress in the short term.
The index, which looks at indicators such as business investment, job vacancies and sick leave to compare Scotland against other UK nations and international competitors, found that Scotland is behind in 11 of the 13 of the indicators for which comparable data is available.
Scotland needs a credible growth plan which must be a top priority for every department in the Scottish Government— Dr Liz Cameron, Scottish Chamber of Commerce
While labour productivity increased in the UK by 1.2%, Scotland’s remained unchanged, according to the report.
Long-term ill health has been a barrier, increasing by 2.3% in under a year and is above the UK average of 25.8%.
However, Scotland now has the second highest workforce training rate in the UK, with 23.9% – compared to Wales 27.8% – but the analysis shows that the long-term aims are still lagging.
And while business practices have improved in the short term, the long-term outlook is not on track for some first, with business investment in Scotland lagging behind the UK.
Recommendations include collaborating with businesses to make good employee health a precondition for economic growth, giving firms access to a stable and thriving labour market.
The Scottish Government has also been urged to capitalise on the transition to net zero by ensuring the workforce is equipped with the right skills and training.
In a letter to candidates, Dr Liz Cameron, director and chief executive of SCC, said: “Scotland needs a credible growth plan which must be a top priority for every department in the Scottish Government.
“That can only be delivered if the next first minister makes economic growth its driving mission and works in an open and honest partnership with the business community.
She added: “We need you – backed by a Cabinet with business expertise and experience – to work with us to remove anti-growth policies and build a globally competitive economy.
The new first minister has an opportunity to re-focus the Government’s energies on delivering economic growth, bolstering productivity and building a greener, fairer, more economically inclusive society— Tracy Black, CBI Scotland
“Answering yes to our questions is the only route for you to demonstrate that Scotland’s entrepreneurs, business owners and employees are being heard and that you have our backs.”
Tracy Black, CBI Scotland director, said: “The new first minister has an opportunity to re-focus the Government’s energies on delivering economic growth, bolstering productivity and building a greener, fairer, more economically inclusive society.
“Growth matters. It’s the bedrock of what delivers life opportunities for people – and supports the Government to deliver on their priorities.”
She added: “Whilst this is undoubtedly a challenging time for many, we cannot lose sight of the longer-term wins, and opportunities to be had in Scotland.
“Businesses have identified areas where they want to invest more, and many have the resources ready and waiting. But firms face uncertainty and that means investment is being delayed, and in some cases that investment is being committed to other markets.
“For too long we have talked about Scotland’s potential; however, without decisive action that potential is being chipped away.”
A Scottish Government spokesperson said: “We welcome this report and note that many of the short-term improvements it identifies reflect the areas targeted by our national strategy for economic transformation.
“Scotland’s longer-term productivity growth has been outperforming the UK as a whole. Since the financial crisis, between 2008 and 2021, productivity in Scotland has increased at an average annual rate of 1.0% per year, higher than the UK average of 0.5%.
“Regional productivity statistics from the Office of National Statistics show that Scotland has been ranked third highest among the countries and regions of the UK in all years since 2010, behind only London and South East England.
“Additionally, EY’s Annual Attractiveness 2022 survey shows Scotland outperforming the rest of the UK in terms of investment growth in projects – up 14% from 2020, while the rest of the UK had a 1.8% increase.
“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.
“Scottish ministers continue to press the UK Government to establish a 24-month temporary worker visa as well as undertaking a full review of the role and purpose of the shortage occupation list.”
