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Sector productivity: Strategic labour market intelligence

In 2015, the UK Commission for Employment and Skills (UKCES) commissioned a consortium of research organisations to prepare a series of papers investigating the current productivity challenges for UK businesses. The consortium, led by the Institute for Employment Studies and SQW, also included the Institute for Employment Research at the University of Warwick and Cambridge Econometrics. The consortium was commissioned to prepare a series of strategic labour market intelligence reports on the challenges and opportunities for increasing productivity in four sectors and two cross-cutting themes.

The recent poor productivity performance of the UK economy has become a major concern for economists and policy-makers. Existing data on productivity differs from sector to sector, presenting a challenge to those trying to unpick the causes of the recent downturn. The Institute for Employment Studies, SQW economic development consultancy, the Institute for Employment Research at the University of Warwick and Cambridge Econometrics examined the creative, retail, manufacturing and food manufacturing sectors, plus digitisation and leadership and management as cross-sector issues for concern. A set of reports on these topics has been produced, which unpack the characteristics of productivity for each sector, outlining the major challenges, looking to the future, identifying priorities for change and how employers and government can help.

The sector studies explore published research and data for existing knowledge on the factors impacting productivity in each specific sector. The two cross-cutting reports investigated what we know of the role of management and leadership and digitisation as factors affecting UK productivity across sectors

Key findings

Creative - New datasets created during this project indicate that the productivity of the UK’s creative industries varies considerably by sub-sector, but compares well overall with European countries. However, the sector’s productivity has been broadly flat since 2000, despite its highly qualified workforce, and has declined relative to the UK economy as a whole. This suggests that the sector is still challenged by the transformation of its business models by digital and internet technologies; by the predominance of micro-businesses; and by the inherent difficulties of managing the creative process in any standardised way.

Food and Drink - Defined by relatively low value-added but high-volume production and levels of international trading, food and drink manufacturing will depend on critical skills of strategic management, engineering and food technology to maintain competitive levels of productivity.

Manufacturing - Labour productivity is higher in manufacturing than the UK average across all sectors but productivity fell markedly during the recession, and has struggled to recover to pre-recession levels. Reduced investment in R&D and issues regardingmanagement and leadership, STEM and ICT skills are increasingly inhibitors to productivity growth.

Retail - The changing face of retail has shifted the productivity agenda in the sector with increasing emphasis on digital skills for online sales and for using ‘big data’ to target activity alongside the need to build a reliable and seamless logistics and supply-chain operation.

Digitisation - The adoption of basic digital technology is now nearly ubiquitous, but the adoption of more advanced applications is more variable – with larger businesses tending to lead the way. SMEs are particularly disadvantaged in using fast-moving technologies, citing lack of time and lack of priority. Meanwhile there are wider challenges of raising digital skills.

Management and Leadership - There is now considerable evidence that management and leadership are linked to firm-level productivity and that the UK is mid-level in terms of measures of management and leadership capability. Improving management skills is inhibited by lack of understanding of what good practice looks like and inability to accurately self-assess organisational management and leadership capability. This suggests greater attention needs to be placed on benchmarking practices and in networking with other firms.

Research outputs

The future of producivitiy in manufacturing (Strategic Labour Market Intelligence Report), by Anne Green, Terence Hogarth, Erika Kispeter and David Owen (IER), plus Peter Glover (UKCES)

The future of productivity in food and drink manufacturing (Strategic Labour Market Intelligence Report), by Terence Hogarth and Erika Kispeter (IER) and Peter Glover (UKCES)

Productivity in the Retail Sector: Challenges and Opportunities (Strategic Labour Market Intelligence Report), by Annette Cox (IES), Graham Hay (Cambridge Econometrics), Terence Hogarth (IER), Graham Brown (GB Writing) and Hayley Limmer (UKCES)

The Relationship between UK Management and Leadership and productivity (Strategic Labour Market Intelligence Report), by Penny Tamkin (IES) and Aoife Ni Luanaigh (UKCES)

State of Digitisation in UK Business (Strategic Labour Market Intelligence Report), by David Mack-Smith, James Lewis and Mark Bradshaw (SQW), plus Duncan Brown ( UKCES)

Understanding the future of productivity in the creative industries (Strategic Labour Market Intelligence Report), by Robin Brighton, Chris Gibbon and Sarah Brown (SQW), plus Aoife Ni Luanaigh (UKCES)

Project Duration: 2015-2016

Project team:

Anne Green

Terence Hogarth

David Owen

Erika Kispeter 

Project partners:

IES logo

SQW logo

CE logo


UK Commission for Employment and Skills