The new report, published for National Productivity Week, highlights that productivity levels can vary greatly even within the same local region and present a substantial challenge to the economic success of the north of England, but national and regional coordination of policies which aim to boost skills and training could help local economies.
Areas such as Northern Lincolnshire and the East Riding of Yorkshire have some of the highest productivity levels of the region, either on par, or above average for the UK. Whilst in South Yorkshire, areas such as Barnsley, Doncaster and Rotherham experience the lowest productivity levels in the region, and one of the lowest levels in the UK, which also affects wages and living standards.
‘Productivity, Training and Skills in Yorkshire, the Humber and the North East’, emphasises that better alignment of, and powers to enact, national and regional pro-productivity policies which focus on skills, innovation, trade and investment will be crucial to strengthen productivity and growth in the UK.
Professor Jason Heyes, one of the authors of the new report, from the University of Sheffield, said: “Our latest research particularly sought to explore the link between productivity levels and the supply and demand for skills and training within these regions.
“We found that those areas that are falling behind UK productivity levels have lower attainment of skills and qualifications, higher levels of under qualified employees and higher skills mis-matches in industry, which implies an increased skills gap is a big driver in the stalling productivity of a local economy.
“This is demonstrated in places like Barnsley, Doncaster and Rotherham which are continuing to experience the consequences of deindustrialisation.”
As productivity is a major driver of economic growth, increasing productivity also benefits wages and living standards. Even though productivity in South Yorkshire increased by £7.80 per hour worked between 2008 and 2022, the growth was less than the regional average in Yorkshire and Humberside of £9.30 per hour worked, and the national average of £11.10 per hour worked.
Professor Jason Heyes added: “Improving the situation will require sustained actions to create more opportunities for individuals to obtain skills and qualifications as well as investment and support aimed at creating productive enterprises and high quality and sustainable job opportunities.”
The report makes several recommendations for the government to understand and forecast labour market changes, and address persistent mismatches between the demand and supply of skills, including:
- Supporting combined and local authorities to establish and maintain pathways for employers and their staff to access resources for education and training opportunities, qualifications and funding.
- Further research into ‘good practices’ in relation to all forms of staff training, in particular apprenticeships to identify the best sources of support for employees.
- Commissioning modelling of labour market business and investment trends, and analyses of employer skills needs to help forecast future regional industry needs.
- Establishing working partnerships between Chambers of Commerce, Combined Authorities, Further Education Colleges and Universities to help build ongoing relationships with employers and training providers.
Redouane Sarrakh, report author, from the University of Sheffield, said: “Skills and knowledge – or human capital – are generally regarded as extremely important influences on productivity.
“Cooperation and information sharing between government, employers and education and training providers to improve the ability for people to gain skills and qualifications, as well as provide accessible pathways into employment and make positive career transitions, will be critical to make a substantial improvement in UK productivity.
“To help businesses adapt to changing circumstances, benefit from new technologies and compete effectively, it is essential that they are able to recruit and retain sufficient numbers of workers with the right types of skills and qualifications and upskill their existing employees.”
Bart van Ark, managing director of The Productivity Institute, said: “There is an urgent need for governments at all levels – national, regional and local – to adopt a place-based perspective on productivity growth. Many UK regions have such low productivity levels that single interventions, even significant ones, won’t suffice. A systemic approach to pro-productivity policies requires them to be joined up and scaled up.”
The authors of the report make up the Yorkshire, Humber and the North East Regional Productivity Forum (RPF), one of eight around the UK established by TPI, which is an ESRC-funded initiative that brings together academics with business, industry and policy representatives to identify and address the causes of the UK’s weak growth in productivity.
