Productivity is a measure of how well a society transforms work and other resources into products and services that improve people’s lives. Historically, productivity has trended upwards over time: more goods and services have been produced for the same level of input of resources, allowing living standards to rise.
But since 2007, productivity growth in the UK has stagnated. Had productivity in the UK grown in line with its previous trend, the UK economy would be approximately £300bn larger today. Compared to many of the UK’s peer nations, such as France, the USA and Germany, UK productivity is lower, and by some estimates up to 20% lower.
Productivity research is one of the ESRC’s most important priorities. Understanding and addressing the causes of this is the ultimate aim of ESRC’s investment in productivity research. Raising productivity levels across the UK is a concern for many businesses and policy makers, but tackling it is a complex ‘wicked’ problem with no easy solutions. In close collaboration with policy and business partners, we have developed an ambitious, innovative, and impactful productivity research agenda. In addition, this research has become more pressing given the need to support economic recovery in the context of the COVID-19 pandemic. The projects detailed below describe the ways in which ESRC has targeted funding to promote productivity research.
The Productivity Institute
The £32m Productivity Institute, headquartered at the Alliance Manchester Business School at the University of Manchester advances knowledge and informs the significant decisions by governments and business leaders aimed at increasing productivity. The Institute is the largest single investment made by the ESRC.
The Productivity Institute brings together world-leading experts from a range of disciplines and backgrounds, and works directly with policymakers and businesses to better understand, measure, and enable improvements in productivity across the whole of the UK. It leads to a step-change in the quality and quantity of research available in the UK that directly informs government policy to improve UK productivity. It looks at levelling up productivity across the whole of the UK, establishing regional research hubs that work with policy makers and businesses to understand the UK’s productivity context. It scales up local and regional findings to inform policy and practice that can be applied more broadly in a coordinated manner.
The institute includes eight partner institutions across the country: the universities of Glasgow, Sheffield, Cambridge, Warwick; King's College London; Queen's University Belfast; Cardiff University; and the National Institute of Economic and Social Research. The institute has a wide range of policy partners at a regional, national and international level (including HM Treasury, the Department for Business, Energy, Innovation and Skills (BEIS), the Bank of England, the Local Government Association, the LEP Network and individual regional LEPs, the International Labour Organisation and OECD’s Directorate for Science, Technology and Innovation).
Programme on Innovation and Diffusion (POID)
The Programme on Innovation and Diffusion (POID) is independent of the Productivity Institute but works complementarily of it. The £5m programme is based at the London School of Economics (LSE). The Programme is rooted in the argument that productivity growth rests ultimately upon two elements: innovation - ideas that are new to the world - and the diffusion of these ideas across the economy.
Funding for the Productivity Institute, the POID and additional forthcoming programmes is provided through UK Research and Innovation’s Strategic Priorities Fund. The Productivity Institute and POID will run for five years.
These new investments align with ESRC’s Delivery Plan, which names ‘Transforming Productivity’ within the Productivity, Prosperity and Growth priority area. They also complement ESRC’s existing investments in the Productivity Insights Network (PIN), investment into the Skills and Employment Survey (SES) at Cardiff University, the Enterprise Research Centre, the What Work Centre for Local Economic Growth and the Productivity Outcomes of Workplace Practice, Engagement and Learning (PrOPEL Hub), a multidisciplinary hub at Strathclyde Business School.
Productivity Insights Network
The Productivity Insights Network (PIN) is a network comprising researchers, business leaders and policy makers to generate and benefit from the latest research on improving productivity. With representatives and activity across the UK, PIN is also building the capacity of researchers to carry out high quality productivity research, with particular focus on the needs of early career researchers.
PIN conducts its own research, provides an on demand research briefing service and operates a small research grants programme for eligible researchers which can include non academic experts. Membership of the Network is open to all and is free.
PIN’s network members run monthly webinars that explore different facets of productivity related issues. You can find more information and sign up for registration reminders on their news and events page.
Other research initiatives
We are also engaged in the following complementary areas:
- Transforming Productivity: Management practices and employee engagement initiative
Five research grants have been funded to investigate management practices’ and their effect on productivity, with a total research council contribution of £3.8 million. Aston University, University of Strathclyde, University of Sheffield, University of East Anglia, and the National Institute of Economic and Social Research (NIESR) were all successful in their application. The projects started in February 2019 and scheduled to run between 24 and 36 months.
AA single Coordination and Evidence Hub, linked to the earlier call for research projects, has also been funded. The PrOPEL Hub at the University of Strathclyde is the successful applicant and the award represents a total research council contribution of £1.56 million due to run for 36 months.
- Productivity research grants
ESRC secured Strategic Priorities Fund investment (Wave 1) from UKRI in 2018 to encourage a broad range of researchers across the diversity of the social sciences to engage in productivity research. This funding has enabled investment in the following projects (more information can be found on UKRI’s Gateway to Research):
Mapping work by the Centre for the Understanding of Sustainable Prosperity at the University of Surrey on the role of energy infrastructure in UK labour productivity, and wellbeing and productivity.
A collaborative project between researchers at the Centre for Competitive Advantage in the Global Economy at Warwick, the Centre for Economic Performance and the Centre for Macroeconomics both at the London School of Economics and project to map the production, diffusion and drivers of future technologies.
A collaborative project between researchers at the Centre for the Evaluation of Complexity across the NEXUS at Surrey, Wales Centre for Public Policy at Cardiff, Enterprise Research Centre at Warwick, Centre for the Understanding of Sustainable Prosperity at Surrey and the From productivity to prosperity: Inclusive growth for the West Midlands project, to identify those institutional and organisational arrangements at the regional level that tend to lead to the 'good' management of policy trade-offs associated with increasing productivity, and to make recommendations to policy makers based on this.
- Transforming Working Lives
The Digital Futures at Work Centre (Digit) is the first grant funded under the Transforming Working Lives initiative. It is led by the University of Sussex and University of Leeds and funded at a total research council contribution of £6.5m over five years.