The latest set of productivity figures show once again the UK lagging lethargically behind comparable countries. Latest figures show the weakest results for two years – and we did not start from a high point.
Productivity – how much we produce a thing for a certain cost compared to other countries – is fundamental to how much wealth we can generate as a country and therefore how much we can invest in pensions, health care, schools, defence, roads and all the other things we like. It also determines how much we can afford to pay ourselves. If, as now, we pay ourselves more than we can afford to based upon the value of what we produce then we risk inflation and other economic problems. For the UK this is a perennial and an increasingly pressing issue to be resolved.
It is, of course, a tricky subject because the plain fact is that as a country we employ more people than other countries do to produce things. It either means we are not working hard enough, and therefore producing more than our competitors, or we are not working efficiently enough, which means we are employing too many people to produce stuff. Work harder or we need fewer workers are never popular messages for politicians or employers. The answer may not be difficult but simply posing the question is, hence the dithering about actually facing up to the problem – which all agree hurts all of us, as a country as well as individuals.
The answer to this challenge involves a blend of public policy initiatives and improved management skills. Public policy initiatives must encourage much more robustly training and skills initiatives, investment in research and development, investment in technology, must entrench the need for effective and efficient procurement as well as production. Better management skills must also encourage a greater desire to invest in corporate skills and infrastructure, a willingness to move away from traditional centres of activity to pioneer in areas of opportunity, and a willingness to take risk supported by senior colleagues and a broader culture that embraces such activity.
For politicians the challenge is to be much more assiduous about nurturing the UK’s business community. Too many are too fond of hurling thunderbolts at business. The gap between politicians’ rhetoric and the fragile nature of building business confidence has grown too wide for comfort. For its part business needs to have a better understanding of and sympathy for the real world of politics. These two areas of national endeavour cannot afford to be two separate cultures peering warily at each other over a mythical fence. Both sides need to come together to create and nurture a culture that rewards long-term investment, prizes technological innovation and rewards the training and up-skilling of our people.
In a world where we have chosen to move outside of the worlds single biggest market and trading agreements the stagnation besetting our productivity is one of those issues that we have been used to being generally aware of but specifically gently ignore when the tough questions are asked and the even tougher answers are produced. There comes a point where a challenge has to be addressed. On the issue of the UK’s productivity gap that time is now fast approaching.