Productivity growth and understanding business’ needs after Covid
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Scottish policy makers face new challenges created by the changing ways in which people work. As employees continue to work from home and businesses downsize their office footprint, challenges over lagging productivity growth will become more pronounced.
The recent Scottish Business Monitor, released by the Fraser of Allander Institute and Addleshaw Goddard, shows that businesses are already downsizing their offices in response to changing work patterns. Almost a third (31%) of businesses are expecting to reduce their office footprint permanently. The average expected reduction is 27%, while 13% of these businesses want to reduce their office footprint by more than half.
This is despite concerns over productivity and ability to manage staff. 60% of respondents said that homeworking had not increased productivity, while 65% said performance managing staff has become more difficult with staff working remotely. The UK Governemt has acknowledeged this is an issue facing the whole of the UK in their recent budget, providing funds for businesses to up skill their managers.
The Scottish Business Monitor also points out there are large divergences in the how business feels supported in Scotland, compared to the UK, and how well business thinks their respective governments understand the challenges it faces. Both are shown in the graph below. This report was produced before either government released their roadmaps out of lockdown.
This seems to be feeding into employment statistics. Unemployment sits at 4.1% in Scotland, while across the UK it is higher at 5%. However, these headline figures conceal differences in employment levels, where the rest of the UK has higher participation. Overall employment levels are slightly higher in the UK at 75%, compared to 74.3% in Scotland. Most concerning though is that economic inactivity is higher in Scotland at 22.5%, than in the rest of the UK where it is 21%, pointing to more people falling out of the labour market permanently.[1]
Now as businesses across the UK look to potential opening dates, governments will face challenges that did not exist before the pandemic with how people work and where people work. Policy makers will need to understand, and work with, business to ensure the economic recovery is driven by innovation and increased productivity, and that these changes do not prevent people from re-entering the labour market.
For an in depth look at the future of work you can read the Where Now Consulting report here.
About Where Now Consulting Ltd: Where Now Consulting is a management consulting company that focuses on helping its clients to grow and compete. The company offers a range of consulting services, including business turnaround and performance improvement, formulating market entry strategies, mergers and acquisitions, joint ventures and alliances, and sales and distribution strategy and management.
[1] Scottish Government