Tech workers are twice as productive for the UK economy, Tech Nation 2017 report finds

Lynsey Barber
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Tech workers earn more and contribute more to the economy (Source: Getty)

Those working in the booming digital technology sector are boosting the UK's economic productivity more than twice as much as other workers, fresh research reveals.

Tech industry workers' contribution to the economy is put at £103,000 per year in terms of Gross Value Added (GVA) compared to the £50,000 contribution of non-digital workers, Tech City UK's annual Tech Nation report calculates.

And the productivity gap between the two has grown to 10 per cent over the past five years.

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The average salary commanded by those in tech is more than 40 per cent higher, based on average advertised salaries, and has risen 13 per cent since 2012 compared to four per cent for jobs elsewhere.

Culture secretary Karen Bradley said the figures highlighted the "fantastic performance" of the digital and technology sectors, which are "driving growth across the whole country and creating well-paid and highly skilled jobs at twice the rate of other industries".

The figures follow a major pledge by the government to help the nation grow its digital skills for the modern age, turning to businesses such as Google, Barclays and Lloyds to ensure "no one is left behind". A host of tech companies, including Microsoft and Amazon, have also promised to help with digital skills training.

More than 1.6m people now work in digital technology, with the average salary at £50,663. And the sector attracted more investment than any other country in Europe in a what was a record year for M&A. £6.8bn poured into the UK last year, compared to £2.4bn for its closest rival, France, and £1.4bn for Germany.

Of the cash flowing into technology businesses, the majority went to firms headquartered outside of London for the first time, signalling that the boom is not just fuelled by the capital.

Dundee had the highest rate of growth in digital turnover between 2011 and 2015, the latest figures available, at 171 per cent ahead of London's 106 per cent. Sunderland was close behind with growth of 101 per cent, followed by Bristol and Bath, and Edinburgh, with growth of 87 and 83 per cent, respectively. Firms in the West Country and Reading also had a higher turnover per worker than those in London.

Read more: The government's tapping up Lloyds, Barclays and Google for digital skills

"There are now significant tech hubs all over the UK, attracting both international investment and overseas talent," said Tech City chief executive Gerard Grech.

"These foundations will be crucial as we prepare to leave the EU. We need to maintain access to skilled workers while doubling down on home grown tech talent."

Several tech industry names warned that continued access to talent will be crucial as the country moves towards Brexit.

“There are some big challenges ahead of the British digital tech sector, not least finding the skilled staff to continue growing at this rate, as the UK prepares to leave the EU," said general partner at Entrepreneur First, Wendy Tan White.

"London in particular has benefitted from migration, with 20% of startups staffed by EU nationals. Whatever happens in the coming months, the UK must continue to be an attractive place for investors to want to put their money, prioritising support and infrastructure for the startup economy.”

Nesta head of policy and research Chris Haley said: “From data analysts in local councils to video games coders and machine learning startups, skilled workers underpin the UK’s digital technology sector, which in turn continues to bolster the wider economy.

"Talent continues to be a core concern, however. Equipping the future UK workforce with the skills that these businesses will need in the long-term should be a top priority. But in the meantime, government must heed the calls from startups, scale-ups and established firms alike to ensure that the UK remains open to top, highly-skilled talent from around the world."

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