APRIL 2020 PRODUCTIVITY: OPINION
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unemployment is compared.
This argument, however,
does not stand up well against
the evidence from countries
such as the US and Germany,
where higher levels of
productivity combine with low
levels of unemployment.
All the evidence, however,
from every source since
accurate international
comparisons began in the
1980s, points to the importance
of quality of management,
workforce skills and investment
in R&D as being critical in
driving productivity and,
therefore, urgent areas for
the UK to address.
It is to be hoped that with
some of the uncertainty of the
last three years now removed
we will now see a major
and much-needed uplift in
investment in these and other
ares of our economy.
As to whether the French
really do in four days what we
in the UK do in five – je ne sais
pas pourquoi, mais j’en doute.
small businesses, which may be a factor affecting
the data and international comparisons with
competitor countries.
The role of technology
The link between technology and increasing
productivity seems to be obvious. The
opportunities, however, for instant access to
information, smarter measurement metrics,
minimising unnecessary activities and the
controversial replacement of lower skilled jobs
by automation and robotics do not appear to
be having a noticeable effect. Questions must,
therefore, be asked as to the level of application
of technology in the U.K. and the skills required
to implement innovation, particularly the uptake
of digital technology.
Another issue is the confusion between
efficiency and productivity. If a company is failing
to efficiently maximise its utilisation of current
technology, it will be a poor and slow adopter of
new technology and future trends.
Other evidence seems to show that foreignowned
companies in the U.K. are more
productive than home-grown counterparts.
This may again be influenced by their scale
and international footprint, but it also
raises the issue of skills, training and the
quality of British management.
The concept of ‘Make Do and Mend’
is still too prevalent with many British
managers and therefore an inhibitor
to investing in all important skills
training at all levels, R&D, plant
and equipment. And while we
have many superb business leaders there is still
too much comparative evidence to show that
we, as a nation, could be much better.
This remains a taboo subject and the ‘elephant
in the room’ for many interested parties,
including government and many business trade
bodies who are fearful of causing offence to those
they regard as ‘stakeholders’
Is there a case for optimism?
While these statistics create genuine cause
for concern, they do mirror trends in other
developed industrial economies, particularly
with the US, which shares a similar macroeconomic
and free market economic model.
The typical single factor productivity model
(i.e. one based on labour) is also a very broadbrush
measurement and one that is often
hampered by limited national high-quality data.
When multi-factor or total factor models are
applied with inputs such as capital, levels of
technology, skills, price levels and others the UK
performs better in International comparisons.
The trade off between high levels of
employment and lower productivity may also
have a short-term societal and political benefit
with the UK’s unemployment rate of 3.9%
compared with France’s 9%, Italy’s 10% and
Spain’s 14%, clearly something to be lauded. The
UK compares even more favourably when youth
“The concept of ‘Make Do and
Mend’ is still too prevalent
with many British managers”
Terry Scuoler, chairman, Institute of Export
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