UKHospitality’s new Social Productivity Index

After a tumultuous last year for the UK’s economy, November and December saw a welcome return to growth, driven by strong results from the hospitality sector that underlined its importance to both the nation’s employment prospects and its financial health.

Despite this, the Government has pressed ahead with the changes announced in last autumn’s Budget Statement that simultaneously pushed up National Insurance contributions, business rates and employee wages from the start of April, leaving many hospitality businesses struggling to make a profit.

In response to these pressures, UKHospitality unveiled its new Social Productivity Index (SPI) in March, a pioneering framework designed to assess the broader contributions of various UK industries and highlight the valuable contribution each makes to the nation. 

What does the Social Productivity Index measure?

Traditional economic measurements often prioritise gross domestic product (GDP), thereby overlooking the social impacts industries can make. The SPI seeks to introduce a more holistic approach, ranking industries on their ability to foster economic benefits and opportunity across a range of metrics. It uses data from the ONS to highlight those sectors that not only drive financial growth but also foster social value, inclusivity and widespread opportunity. 

There are 12 key characteristics that the SPI analyses, ranking each sector’s ability to create growth for each one. These characteristics include things like employment opportunities for part-time workers, engagement of individuals under 25, accessibility for non-graduates, geographic distribution of employment, gender balance, and the inclusion of non-white British team members. By looking beyond raw economic performance such as GDP, the SPI provides a much more nuanced and realistic perspective on how industries contribute to society.

What are its key findings?

Notably, the SPI revealed that foundation sectors like hospitality, office/admin, and retail, excel in delivering socially productive growth, with hospitality emerging as the top performer overall. Hospitality ranked first in employing part-time workers, individuals under 25, and providing opportunities for non-graduates. Additionally, it featured in the top five for geographic spread, gender balance, and employment of non-White British team members, although it could do better in terms of employing people with a disability, with a ranking of 12 out of 21.  

Conversely, sectors traditionally viewed as economically productive, ranked lower on the SPI. This suggests that while these sectors contribute significantly to GDP, their social impact, in terms of widespread employment and inclusivity, is comparatively limited.  

What conclusions can we draw from the SPI?

For businesses within the hospitality sector, the SPI offers several valuable insights into the UK economy, as well as recognition of the contribution that sectors such as transport, hospitality and healthcare make widely across the country. It shows they drive economic performance in deprived areas and create opportunity for people from diverse backgrounds.

It also shows that measuring a sector’s importance by GDP alone can prove too narrow a lens, with over-emphasis placed on industries that provide huge benefits to a small group as well as businesses feeding London and its financial district, or the wider southern counties.

How can it be used?

The data the SPI provides can serve as a powerful tool for advocating policy changes. By showcasing the sector's role in promoting social mobility and inclusive growth, industry leaders can engage with policymakers to secure support, funding, and favourable regulations that bolster the sector's contributions. 

The SPI also provides a benchmark for businesses to assess their performance in social productivity relative to their peers. This can inspire initiatives aimed at improving employment practices, diversity, and community engagement.

Overall, the findings demonstrate the complexity of an economy and that its success cannot be measured solely by one or two specific, narrowly-focused metrics. The SPI attempts to widen that measurement and in doing so offers a more comprehensive analysis through which to view the contributions of industries to society. For the hospitality sector, the SPI not only affirms its significant social impact but also provides a roadmap for future growth that is both economically and socially enriching.