Productivity is above national average

Oct 18 2006 By James Ramsbotham, Chief Executive Of The North-East Chamber Of Commerce, The Journal

The range of fast growth businesses, as shown in this list, demonstrates the health of the North-East economy. Every single sector is represented.

It is particularly encouraging to note the number of companies providing a range of business services - for them to grow rapidly they need other successful businesses. These rates of growth can only be achieved through immense dedication and expertise by whole teams.

They need a range of skills and to be at the leading edge of their professions. The challenge for them and all of us is to sustain this excellent progress. We have languished at the bottom of the UK regional league table for many years. Successful businesses in the North-East have had to work extra hard to achieve their goals in an atmosphere of deprivation and lack of positive belief.

The message from regional leaders has been to emphasise the negative aspects of life in the area. It is hard to triumph in such a culture.

But no longer. A recent publication from Durham University Business School, Northern Economic Review No. 37 - Summer 2006 makes the point that previous analysis missed a crucial aspect. Our productivity is actually above the national average.

This has always been measured using Gross Value Added (GVA) but no allowance was made for regional pricing differentials. Here in the North-East we enjoy prices that are some 9% lower than in the UK as a whole and so economic measures of performance should be inflated to compensate.

On this basis our productivity is some 5% higher than the national average. Other indicators of success back up this assessment. We have more job vacancies than job seekers and that is after employing 40,000 immigrant workers. So these 50 hard working successful businesses are representative of a thriving business economy - something we deserve but have not enjoyed for some time.

However, success brings new issues. The biggest challenge facing our successful organisations is skills shortages. Many businesses are already turning work away because they lack the resource they need most: capable people. Our good people are working flat out and we need more.

We need to encourage good people to come here from other parts of the world. We need to encourage our young people to achieve their very best to develop the skills we need; and to stay here and build careers. We also need to motivate the cohort of people who are not economically active and tackle worklessness once and for all.

The North-East and its fast growing businesses are in great shape. It is sustainable as long as we motivate and develop our people.