Productivity and Prosperity: Inclusive Growth for the West Midlands

At the heart of this project is the “productivity puzzle” and the magnitude of the issue facing the “problem regions”. 

The UK lags behind most OECD countries in terms of average productivity and productivity growth rates. Particular regions of the UK are behind this average because of a combination of factors, including shortage of skills, local industry structures, levels of investment and management practices. This project will examine the West Midlands region, working with both businesses and policy makers to identify these factors in different industry sectors in the region and link these to macro-economic data at the regional and national levels.

The project brings together a team of researchers from various disciplines including labour market analysis, international business, engineering, economics, operations research, decision sciences, human resources, innovation and entrepreneurship, among others, who study productivity issues from a wide range of perspectives and using a range of state of the art methodologies. Our findings will assist both policy makers in understanding interventions that will boost productivity and understand trade-offs vis-à-vis inclusivity, and the private sector in unblocking productivity growth in supply or value chains.

Objectives

The City-REDI team will focus particularly in the relationship between regional mismatches between the supply of and demand for specific labour skills as a constraint not just productivity improvement but also inclusive growth. Understanding the effects of this relationship provides an important input into the strategic economic plans (SEPs) and local industrial strategy of regional authorities, including the West Midlands Combined Authority (WMCA). We will work closely with the WMCA, in the development and delivery of the Local Industrial Strategy and with the Inclusive Growth Unit.

Different levels of productivity and per-head GVA (Gross Value Added) are at the centre of growing regional disparities in the UK. GVA per head in the Midlands is one of the lowest in the country, related to higher than national average unemployment and lower than average skill levels and investment in the region. This partly creates inequalities of opportunity and investment and increasing differences in the ability of regions to attract, develop and sustain businesses that create sufficient wealth to balance the costs of supporting these regions.

Our aim is to identify how skills and regional labour markets act as productivity constraints at the firm level, across different corporate functions and different industry sectors. This will involve a survey of firms in the region, analysis of secondary data sources and interview-based deep dives into the following sectors: (1) business and professional services, (2) advanced manufacturing (aerospace and automotive); (3) retail; (4) hospitality.

Research team

The City-REDI team at Birmingham is responsible for analysing ‘regional productivity differences, skills and inclusive growth’. The team is led by Professor Simon Collinson and Professor Anne Green and includes Dr Chloe Billing and other members of the City-REDI research team, including Professor Raquel Ortega Argiles. We will identify local factors that underlie and explain regional differences in productivity, with a focus on mismatches between the supply of and demand for specific skills. We will also consider key trade-offs between productivity improvement and inclusive growth goals.

Our academic partners are: Professor Nigel Driffield, Warwick Business School, and Professor Janet Godsell, Warwick Manufacturing Group. Nigel will focus on the productivity benefits of inward investment, including the relationships between firm strategies, job creation, spill-overs and wider employment effects. Janet is an expert on ‘analytics enabled supply chains and operational productivity’ and will examine links between OEM demand profiles and their influence on productivity across regional supply chains.

Project collaborators

We have a number of partners from both the private and public sector, including Midlands Engine, West Midlands Combined Authority (WMCA), 5 LEPs, private sector firms including Jaguar Land Rover and Aston Martin the CBI, the Chambers of Commerce, TUC and Unite. Some of these partners are contributing funding and in-kind support for the project.

Survey: Productivity, Innovation, Economic Growth and Inclusion in the West Midlands - Information for Participants

Regional Productivity Differences, Skills and Inclusive Growth: Survey Findings 

View and Download the Report (PDF) 

This report outlines key findings from a survey of 300 firms in the West Midlands region, across the business professional and financial services; advanced manufacturing; retail; and hospitality sectors. The survey involved a 25-minute telephone interview, undertaken on behalf of the project team by IFF Research. The broad topics we covered in the survey were: (1) firmographics; (2) occupational structure; (3) productivity indicators; (4) skills – current structure, current constraints; (5) innovation; and (6) local embeddedness.

The central aim of the overall project is to identify local factors that underlie and explain regional differences in productivity, with a particular focus on mismatches between the supply of and demand for specific skills. Additionally, it considers key trade-offs between productivity improvement and inclusive growth goals. The City-REDI team aims to do this by addressing the following research aims:

  1. Investigate how features of regional labour markets, especially skills, act as productivity constraints at the firm level, across different business functions and industry sectors.
  2. Examine the specific misalignments at the regional level between the supply of and demand for particular kinds of labour/ skills
  3. Examine the motivations and outcomes of decisions about investment in skills and other factors and how these can stimulate improvements in productivity and – ideally – inclusive growth.

If you have any questions, email the research team:

Professor Anne Green 

Dr Chloe Billing  

Download the FAQs


The Figure is titled ‘The Drivers of Productivity: Connecting Micro and Macro, Local and Global Levels of Analysis. It presents three geographic or spatial units – a region, within the UK, within the world as a whole (shown horizontally, as a row). Labels show that there are differences in the economic contexts at all three levels, between the world economy, the UK and the region, within the UK. Firm value chains, trade and investment flows cross all of these spatial areas. A second dimension (shown vertically, as a column) expands on the description of region as host to a selected range of industry sectors and within these, a selected range of firms. These represent different levels of analysis for research on productivity within regions, which together account for the UK productivity, and world productivity statistics. Competition, technology, skills, market demand are amongst the components which determine productivity at the industry sector level and these are labelled in the sectors part of the figure. Firms within sector represent the microfoundations of productivity. Firm structure, skills, technology, innovation management, employee incentives are amongst the factors that determine firm – level productivity. The figure as a whole aims to demonstrate that if we want to understand the factors that account for high-level, aggregate productivity at the region, country or global level, we need to focus on the microfoundations of productivity at the level of the firm. These factors account for the patterns we find as we aggregate up the hierarchy, to sectors, regions and countries.

Funder/client: UKRI ESRC (Economic and Social Research Council) 
Timescale: 36 months starting October 2018

CONTACT

Simon CollinsonProject lead: Simon Collinson
Tel: 0121 414 9672
Emails.collinson@bham.ac.uk