The Pledge must pass scrutiny before it can ever get my full backing

SINCE the publication of the Scottish Business Pledge last month I have been asked by staff in two Scottish Government agencies to promote its contents to the business community.

I have politely declined whilst we consult with our members on their attitudes both to the Pledge and more specifically to the call for all businesses to pay the Living Wage. We have already begun detailed consultation on the Living Wage following an earlier request from city council leader Gordon Matheson.

The Scottish Government is now asking businesses to commit to the Living Wage, as well as two more from a list of nine topics including innovation, exports, gender balance on boards, reduced use of zero-hour contracts and investment in youth skills.

There is some hint in its Economic Strategy that the Scottish Government intends to use the Pledge process as a guide to deciding which companies receive support from its agencies.

The Pledge was initially outlined in the latest Scottish Economic Strategy published by the First Minister in February, which I think is meant to provide the rationale for its various elements.

I have taken the time to read through the new document and the two economic strategies published in 2007 and 2011.

If I am to promote the Pledge to member companies I need to be able to persuade them, and indeed myself, that it is based on sound thinking.

One of the questions I am struggling with is that the 2015 strategy tells us Scotland has partially closed a long standing productivity gap with the rest of the UK. But it does not say how. Nor does it say much about the scale of the gap the UK still has with competitor countries like the United States, Germany and France.

This was something the 2007 strategy spent some time exploring, and increasing business investment was considered an important factor.

Now we are told reducing inequality is the main way to continue improving productivity, and much of the pledge seems designed to tackle this inequality.

Whilst it is true that countries with low inequality measured by the Organisation for Economic Co-operation and Development’s (OECD) Gini-coefficient often have high productivity too, the US continues to have the highest productivity amongst large developed countries as well as high inequality measured by the Gini coefficient.

So how convincing is it that reducing inequality is the main answer to our productivity challenge?

Is it not just as important to understand why our business research and development remains so low? Or how well our industrial policy for growing key sectors is performing?