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Productivity in the UK Creative Industries: an uncertain ‘je ne sais quoi’...

A guest blog from BOP Associate Director Iain Bennett on the limits to what we really know about the creative economy.
The DCMS’s latest figures on employment (The Creative Industries: Focus on Employment, DCMS 2014) reveal some good news.

Employment is rising both in the creative industries and in creative occupations in the wider economy; and the relative share of these sectors is increasing as a proportion of employment in the economy as a whole. Some sub-sectors also appear to be addressing concerns that the creative industries are overwhelmingly white, male and middle class, although this is somewhat of a varied picture. The sector with the highest levels of BAME employment (IT, software and computer services, at 15.1%) also has the lowest female representation in the workforce (18.4%). The UK’s museums and galleries have a workforce that is 69.5% female but are disappointingly underweight in BAME opportunity, with only 6.2% of posts. However, twice as many women work in IT as in museums and galleries (152,000 to 76,000), so the figures do not tell the whole story about the nature of the opportunities within those occupations.

But what none of these figures reveal is whether the UK’s creative industries are getting any more productive, or competitive.

In relation to productivity, it’s unfortunately difficult to cross-reference these employment statistics against the DCMS’s Creative Industries Economic Estimates, as the two data sets use different time series. In any case, better statisticians than I would no doubt caution against a pooling of estimates drawn from standard industry codes that have long been seen as inappropriate for the dynamic nature of creative careers. And why does productivity, with its Taylorist overtones of time and motion, have anything to do with the outputs of industries dependent on the creation of new intellectual property, rather than factory gate products?

So what about competitiveness? Well, the DCMS figures look only at the UK context, partly because another department, BIS, has responsibility for trade and export. There is no reference here to the ‘global race’ for market in one of the sectors commonly assumed to be a wellspring of future growth. We might look for this to UKTI, which also launched its new creative industries strategy (a piece of work with which BOP was involved) on Monday. But though that document talks about ‘big wins’ and the ‘creativity is great’ campaign, it doesn’t really examine the UK’s relative position. It seems, for instance, that the French are doing better than us at present.**

Our incomplete understanding of the drivers of productivity in the creative industries is – like all blind spots – potentially problematic.

Local Enterprise Partnerships across the country are right now deciding how to apportion European Social Funds (for skills) and European Regional Development Funds (structural monies, including business support) for the next five years. This is a precious, and reducing, resource. So whilst ‘industrial policy’ is still a phrase rarely heard in Government, there is a tacit understanding that targeting ESF and ERDF money is influenced by a sense of ‘picking winners’. Many LEPs – probably more than the handful that house significant clusters of digital and creative businesses – identify creative industries as a ‘strategic’ or ‘priority’ sector, on the premise that money spent here creates wider opportunities for their communities, and higher rates of economic growth, than investment in other sectors. But without clear data on productivity, on what basis are they making those decisions?

Without proper evidence, there’s a risk that a stimulus in one area will be no better than displacement activity and, measured on a national level, deadweight. Money spent to encourage ‘creative’ graduates to start a business in Lincoln’s excellent Sparkhouse incubator (for example) has profound results in that location, but may not result in any greater return to the national economy than letting them go to Leeds or London to do the same. Nobody really knows the costs and benefits of either choice, because there is no serious and nationally coordinated attempt to understand productivity in the creative industries from company to company, sector to sector, place to place.

So the challenge then isn’t about the accuracy of DCMS’s numbers, but rather the validity of those numbers when set against what is not measured, and of the outcomes asserted on the basis of partial evidence.

Measures of increasing employment are not a proxy for a more competitive and internationalised sector. They do not take into account the fluidity of employment practices within industries that rely to a significant extent on freelance labour; nor do they clarify the complexity of supply chain and value relationships within the sector. This has profound implications for proposals to invest in existing ‘clusters’, if the assumption is this will produce more jobs and attract inward investment. It is even more critical where public intervention is seeking to build ‘critical mass’ without having a clear understanding of whether attracting and retaining firms at a local level will have any net effect on competitiveness. Those are the statistical relationships that really count.

In the weeks and months ahead, we will be exploring on the BOP blog how those outcomes may be more closely and accurately drawn out.

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**Yes, France, with its 35 hour working week and, as Boris Johnson keeps reminding us, a large slice of its talent pool now located in London, has overtaken the UK to become the sixth largest exporter of creative goods and services. The news that we were as low as sixth will no doubt come as a shock to the casual observer who may have assumed from UK Government press releases that only the inconvenient truth of Hollywood was keeping us from world domination in the field. ‘So what?’, you may think. The French produce all those expensive handbags and other goodies beloved of the growing middle class in China and any number of developing economies. It all comes under state protection and it’s really just a facet of its manufacturing industry, isn’t it? Well, maybe.