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Rethinking productivity

Two men pushing boxes in a warehouse

As the UK considers how its economy can recover from the impact of the pandemic, a new institute based at Manchester is aiming to reframe the debate on productivity.

A new national institute aims to change the way the UK thinks about, measures and increases productivity. Based at Alliance Manchester Business School (AMBS), the Productivity Institute will lead on a £32 million five-year project, supported by the largest grant ever given by the Economic and Social Research Council.

The establishment of the Institute underlines that increasing productivity is crucial to the country’s economic recovery from COVID-19. It will focus on three areas: an extensive interdisciplinary research programme, collaboration with business and integration with policy.

Rethinking productivity

“Simply treating productivity as efficiency gains or more output over input won’t cut it,” says Bart van Ark, Professor of Productivity, who heads the Institute. Before joining Manchester, he spent 12 years as Chief Economist at New York think-tank The Conference Board. He’s also an honorary professor at the University of Groningen in his native Netherlands.

“We need more thinking about what productivity means for business, for workers and for communities – how it is measured and how it truly contributes to living standards and wellbeing.”

That means reframing the public debate away from the idea that productivity cuts jobs, or makes work less valuable, towards it being a critical source of long-term inclusive growth and the levelling-up agenda, helping to create decent jobs and develop resilience against three key challenges: climate change, an ageing population and increasing digitisation.

The Institute is a consortium of members from Cambridge, Cardiff, King’s College London, Warwick, Sheffield, Glasgow and Queen’s Belfast, as well as the National Institute for Economic and Social Research. AMBS was chosen as the Institute’s headquarters because of its outstanding facilities, the interdisciplinary nature of the School’s research programme, and a well-developed regional ecosystem of business, government and the education system into which the researchers can tap.

Each university will work with businesses through eight Regional Productivity Forums, helping to scope the Institute’s research, place learnings in a regional or local context, and share insights with other regional and sector platforms.

We need more thinking about what productivity means for business, for workers and for communities.

The forums will also provide critical input to the Institute’s National Productivity Council so that national policies and institutions are guided by bottom-up, evidence-based insights.

“We need to communicate our findings and messages to government, to firms, to government at all levels – national and regional – but also listen and engage with them so we’re aware of the problems, the issues people face on the ground,” says Professor van Ark. “We really want to have this two-way engagement with stakeholders. It’s essential to our approach.”

Prosperity, resources and jobs

Professor Tony Venables joins from the University of Oxford as Research Director, overseeing a programme that covers eight themes – from human and knowledge capital to macroeconomics, measurements and place – and drawing on expertise from social sciences, engineering, physics, political
science, business management, innovation research and data science.

At Manchester, researchers involved include Professors Frank Geels, Jill Rubery, Cary Cooper and Andy Westwood.

“Productivity really matters for three main reasons,” Professor Venables says. “First, it is a fundamental driver of prosperity. Essentially the value of what we produce determines the value of what we earn. That’s true for individuals, true for regions and certainly true for society as a whole.

“The second reason is it’s not just about getting more, it’s about using resources more efficiently. That’s about energy use, natural resource use. The more efficiently we use these inputs, the less of them we will need.

“And the third reason, of course, is creating jobs – creating productive jobs – particularly at a time like the present where there will be a lot of job losses. It’s essential that we have strategies to create productive jobs to replace them.”

Find out more about the Productivity Institute.

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