Firms act to improve productivity and competitiveness

A SURVEY of more than 1,000 businesses in the Highlands and Islands has shown that almost all (95 per cent) have taken action in the past 12 months to become more productive and competitive.

This is according to the findings of the latest business panel survey published last week by Highlands and Islands Enterprise (HIE).

The most common step taken by businesses (71 per cent) is encouraging staff to submit ideas for improvement. Others include introducing new practices (69 per cent), investing in premises or equipment (67 per cent), and collaborating with other businesses (65 per cent).

According to the latest ONS data, productivity in Scotland has traditionally lagged behind that of the UK, although the gap has narrowed.

The productivity challenge for the Highlands and Islands is more acute, reflecting the dominance of small firms in the regional economy, a lower share of high paying sectors, a lack of private sector head offices, and a strong service sector structure.

Just under three-quarters (72 per cent) of businesses that had taken action said this had enhanced their overall productivity. Other benefits included attracting new business (67 per cent) and staff feeling more engaged (66 per cent).

The main challenges faced in implementing changes were lack of time and attracting the right skills into the workforce.

In line with previous surveys, the majority (79 per cent) of respondents reported good (41 per cent) or steady (38 per cent) performance over the past year. More than three quarters (77 per cent) are optimistic about their prospects for the next 12 months and 88 per cent anticipate growth (41 per cent) or stability (47 per cent) in the next year or two.

Most businesses again reported stability in levels of employment, staff training, working hours and exports. However, while two fifths reported an increase in sales and turnover, only a quarter (24 per cent) saw a corresponding uplift in profits.

Recognition of the importance to the Scottish economy of free movement of people across the EU continues to grow, increasing from 75 per cent to 84 per cent over the past six months. Two fifths (40 per cent) felt this aspect was important to their own business. Around eight in 10 (78 per cent) businesses recognise the importance of membership of the European single market to the Scottish economy.

Nine in 10 (89 per cent) businesses in the region see access to the European single market and/or free movement of people as important to the Scottish economy, and 64 per cent to the operation of their business.

Carroll Buxton, director of regional development at HIE, said: ‘Raising productivity levels in an increasingly competitive economic environment is very important to sustain employment, income impacts and profits. This will help to encourage further business investment and spending, both of which are critical for sustainable economic growth.’