Inclusive growth: a driver of productivity

In a series of articles in partnership with TheBusinessDesk.com, the York, North Yorkshire and East Riding Local Enterprise Partnership is exploring what makes good growth as it partners with business to outline its Local Industrial Strategy. Here Mike Hawking, Policy and Partnerships Manager at Joseph Rowntree Foundation, explains why inclusive growth is vital for positive outcomes.

Local Industrial Strategies’ primary purpose is to boost productivity. Yet it’s vital that as the economy grows, it brings benefit to individuals and communities. The economy, how it is designed and led, should contribute to improving the living standards, health and wellbeing of diverse citizens.

Almost all of our businesses (97%) are SMEs and in rural areas they often sit at the centre of community life. Businesses tell us that they are struggling to find the right employees, yet unemployment across our LEP area is at an all-time low.

Achieving a more inclusive form of economic growth would support everybody to contribute to the economy as healthy and happy employees and in doing so, realise their full potential. This means a renewed focus on those who face particular barriers to work and those who are more likely to be under-employed.

Delivering more inclusive growth will require both the private and public sector to make longer term investments to produce better outcomes for both individuals and the boarder economy. Inclusivity is at the heart of healthy communities and will be a key component of driving productivity improvements in the future.

A good economic strategy will have a clear understanding of who would benefit from the interventions that are being proposed. A truly inclusive economic strategy would have an explicit focus on how people on low incomes and those currently excluded from the labour market can both contribute to and benefit from a growing economy.

To loosen the grip that poverty has on people’s lives, we can no longer rely on old assumptions that prosperity will trickle down. A rising employment rate is no longer helping families out of poverty as it once did, and people in many parts of our region are locked out of opportunities to access good jobs.

In order to have an economy that works for everyone, we must turn policy ambitions into action. Policy makers need to work alongside businesses to understand the support they need to produce good jobs with improved outcomes for their employees.

Ensuring the skills system can meet employer need, but also help individuals to progress and develop their career, is a clear area for collaboration. Employers will often state they need Level 4 and above skills, but part of meeting that need is to ensure learners are able to access appropriate Level 2 and 3 qualifications in order to reach the progress into higher levels to learning that are needed to meet labour market demands. Too often there are gaps in this provision, that exclude those learners who need to progress from a basic level.

In order to be inclusive, for every community, especially across such a dispersed geography as ours, connectivity to learning and employment is vital. Improving local transport links, including bus services serving towns and rural areas, could help to remove potential barriers to learning and, therefore, higher-level employment.

Many low-income households want to work more hours than their current job allows them. Delivering a more inclusive economy must tackle the issues of under-employment and consider support for those working in jobs that do not utilise their full range of skills.

For example, many women returning to work after a career break to start a family, struggle to find parity with their male counterparts, as flexible working in their specialist sector is limited. A reformed business support system that can help employers to improve job design and facilitate flexible working could be key. Unlocking potential in the wider workforce is a proven way to help drive productivity improvements.

While it’s true that boosting productivity can help improve living standards, too often our efforts are only about the ‘shiny and new’, focused on cutting edge firms and technological innovation. Yet some of the biggest opportunities to boost productivity lie in our low pay sectors, such as retail and hospitality, and in the long tail of low productivity firms.

If we are to improve the living standards of the shop assistants, baristas and care workers that live in towns and cities across the region, then we need to put much greater effort into policies that will actively benefit them. Pursuing productivity enhancing interventions that will benefit workers, such as increasing on the job training or better management practices, should be a priority.

Delivering a more inclusive form of economic growth can benefit both individuals and businesses. Clear leadership is required to make it real in our local area.  The region needs to develop an aspirational, shared vision about the kind of place we want to live in and the kind of economy we want to have.

This vision needs to be co-created, bringing business together with education providers and the public sector, to articulate ambitions for the local economy in a way that seeks to provide real and tangible benefits for communities.

Do you agree? Get involved by giving your view on the YNYER LEP website.