Why is this Purpose target important?
The economy's sustainable rate of growth depends on several key factors: the numbers of people working, the average number of hours worked and the productivity of each hour worked. Productivity is a measure of how well an economy uses resources to produce output and is a fundamental determinant of international competitiveness and living standards. Labour productivity (as measured by GDP per hour worked) provides an effective, internationally recognised and comparable measure of competitiveness. Low labour productivity translates into low wages and poor living standards: profitable businesses will pay workers no more than they produce.
What will influence this Purpose target?
International evidence suggests that the following all have an impact on productivity performance:
- Increased value, more effective and better targeted use of investment in physical capital.
- Skills and qualification levels in the population.
- The level of Research and Development (R&D) and innovation in business.
- Entrepreneurship rates.
What is the Government's role?
The Government can take a number of actions to influence productivity, including:
- Learning, skills and well-being: a supply of education and skills that is both responsive to, and aligned with, actions to boost demand for skills.
- Supportive business environment: a broader approach to business innovation; stronger links between the research base and businesses; a responsive, focused enterprise support environment; and a focus on key sectors with the capacity to boost productivity.
- Infrastructure development and place: establishment of a planning and development regime to give greater certainty and speedier delivery.
- Effective government: streamlining of the Government's direct dealings with business, for example, in procurement.
How are we performing?
In 2006 Scotland was ranked in the second quartile for productivity levels amongst OECD countries. Between 2005 and 2006 the gap between productivity levels in Scotland and the lowest ranked country in the top quartile (Germany) increased by 0.6 percentage points.
Source: Organisation for Economic Co-operation and Development, Office for National Statistics
Methodology
This evaluation is based on: any difference in the gap within +/- 1 percentage points of last year's figure suggests that the position is more likely to be maintaining than showing any change. A decrease in the gap of 1 percentage point or more suggests that the position is improving; whereas an increase in the gap of 1 percentage point or more suggests the position is worsening.
For information on general methodological approach, please click here.
Further Information
2007 Spending Review Technical Note
Statistics Topic Page