Intelligence Hub Blog – Bridging the Productivity Gap: Lessons for Glasgow City Region
As the UK marks National Productivity Week, the spotlight is on how regions can drive economic growth and improve quality of life through enhanced productivity. For Glasgow City Region (GCR), this conversation is particularly timely. The Region has set an ambitious goal: to become the UK’s most productive city region by 2030.
Productivity isn’t just a business buzzword; it’s a critical engine of societal progress. When regions boost productivity, they not only elevate their economic standing but also improve infrastructure, deliver better local services, and enhance quality of life. Yet, achieving such a transformation is far from straightforward.
Over the past five years, the Glasgow City Region Intelligence Hub has been rigorously analysing the Region’s productivity challenges. A recent analysis comparing GCR with the West of England, the UK’s top-performing city region in productivity, highlights key factors behind GCR’s lagging performance and explores strategies to bridge the gap. While GCR ranks joint second with Greater Manchester in terms of productivity growth—an achievement that places it among the best-performing core city regions in the UK—there is a recognition that this is only the starting point. The Region is determined to build on this success and aim even higher, striving to close the gap with the UK’s leading performers.
The Productivity Puzzle
The West of England owes its higher productivity to several factors, starting with its economic structure. The region boasts a higher concentration of industries in tradeable sectors—those that export goods and services—and greater employment in knowledge-intensive occupations. A higher concentration of tradeable industries and knowledge-intensive occupations enhances productivity by driving innovation, accessing global markets, and producing higher-value output, while fostering spillover benefits to other sectors. This structural advantage translates into higher labour productivity, a measure of how efficiently workers produce output.
In GCR, however, some sectors lag in productivity, pulling down the Region’s overall performance. Innovation, investment, and skills—key drivers of productivity—also show stark contrasts between the two city regions.
Innovation: The Key Driver to Productivity
Innovation is a cornerstone of economic success, and the West of England excels in this area. It invests more heavily in research and development (R&D) and produces a higher number of patents per capita, indicating a robust capacity for turning ideas into marketable products. GCR, while showing promise, struggles to translate its innovation efforts into tangible productivity gains.
Data limitations complicate cross-regional comparisons, but one thing is clear: GCR needs to strengthen its innovation ecosystem. This could involve fostering stronger collaborations between universities, businesses, and government to accelerate R&D activities and increase the commercialisation of new ideas.
And it is why the Region has been working with partners to deliver the GCR Innovation Action Plan. Specific actions that will address weaknesses in this area include developing entrepreneurial campuses with dedicated spaces to support startups and establishing innovation fellowships. These fellowships aim to attract and retain top talent by fostering collaboration between academia and industry.
Investment: Quality Matters
On the surface, GCR performs well in attracting investment. Its gross investment rate is on par with the West of England and exceeds that of Greater Manchester, often cited as a magnet for investment in recent years. However, the type and quality of investments in GCR don’t always align with the needs of high-productivity sectors.
For example, the Region lacks sufficient quality lab space to support industries like Life Sciences—a stark contrast to WoE, which boasts specialised infrastructure tailored to the demands of innovative industries. Whether it’s through the new Regional investment zone or other initiatives, addressing these gaps will require strategic investments that prioritise infrastructure suited to high-value sectors.
Skills: Building a Resilient and Skilled Labour Force
GCR stands out for its highly skilled workforce, ranking among the best in UK Core City Regions. Yet, skills shortages in key sectors and health challenges within the labour force act as bottlenecks. These issues not only limit the Region’s productivity but also hamper its ability to attract high-performing firms. Long-term investment in education, vocational training, and health initiatives is essential to unlocking the full potential of GCR’s labour force. This is one of the reasons why the Region has been vocal in pushing for greater skills powers.
A Balanced Approach
To realise its productivity ambitions, GCR must take a balanced approach that targets both tradeable and non-tradeable sectors.
In tradeable sectors, attracting high-performing firms is crucial, as is improving the productivity of existing businesses. This will require sustained economic policies, investments in skills and infrastructure.
But productivity gains shouldn’t be confined to tradeable sectors. Modernising non-tradeable sectors, like Retail and Social Care, can yield significant benefits. Often referred to as the Foundational Economy, these sectors provide essential goods and services that support daily life. Innovations like digital tools and process improvements can boost productivity here, improving living standards for lower-income households and fostering a more equitable economy.
Balancing Growth with Inclusion
Boosting productivity in GCR isn’t just about economic growth; it’s about creative a more inclusive economy. GCR should consider the potential downsides of success, such as rising housing costs and gentrification, which could strain the Region’s social fabric. A more productive workforce will drive demand for housing, requiring careful planning to ensure affordability and accessibility.
Conclusion
While productivity remains one of GCR’s key economic challenges, we are determined to achieve our ambition of becoming the UK’s most productive city region by 2030. We will continue to rigorously review and analyse our performance, ensuring we identify areas for improvement and adopt innovative solutions.
Read the latest Intelligence Hub analysis: Exploring the Factors Driving Glasgow City Region’s Productivity Gap with the West of England
Find previous blogs, economic analysis and more information on our Intelligence Hub page.
