That choice of where to place public spending in order to get improved productivity out of the economy, leading through to more prosperity and better living standards, is going to be a feature of next year’s Holyrood election.
In this Productivity Index report, there’s much for the candidates and parties to chew over. It’s clear there are no easy or quick fixes. It’s less clear, from this publication at least, that there are quick and easy ways to undermine productivity and growth.
The CBI is setting out the challenge. Scotland director Michelle Ferguson observes: “With a Budget in January and elections to Holyrood next year, firms will be looking to the Scottish government for decisive moves on tackling economic inactivity, addressing challenges around skills and training as well as boosting exports.
“If we want higher growth, better wages and improved living standards, we need a plan of action which delivers.”
At the Fraser of Allander, Mairi Spowage says: “We have known for many years that the Scottish workforce has higher levels of inactivity due to illness or disability.
“This means that policy initiatives have to consider a much wider range of issues than simply economic development or investment if we are to improve productivity of Scottish workers.”
Nobel economics laureate Paul Krugman has observed of productivity: “It’s not everything, but in the long run, it’s nearly everything”.
There are alternatives, however, to measuring a nation’s economic success by how much a paid worker adds value in the course of an average hour worked.
Wellbeing is one that gets a lot of attention. It can improve quality of life, which is not to be dismissed lightly. But does it pay increasing bills from an ageing population and climate change, and does it improve prosperity?
These may seem like abstract economic concepts, but they directly reflect factors in the real world that determine our living standards and drive our politics.
