Articles

UK PLC needs to do better

In UK productivity, Uncategorized on December 13, 2010 by Tim Aikens

Last week was a really positive message. This close to Christmas, its a shame to have some bad news.  Yes the UK is doing well in terms of productivity growth, but nowhere near well enough!  The latest ONS data for comparative productivity (2009) puts the UK still some 30% (yes thirty) behind the USA, about 8% behind France and over 10% behind the rest of the G7 (as was).  So UK manufacturing may have done well, but a real quantum leap is needed if we are even to catch the USA.

Looking at data from the Bureau of Labor Statistics in the USA, I see that UK manufacturing output per hour grew by a healthy 3.6% average between 2000 and 2008.  But in the US the number was 4.6%, Sweden 4.8%, Germany 3.7% and France 2.6%.  So the UK is just about keeping pace!

This raises all sorts of questions.  Many of the responses I have discussed in previous blogs:-

–  Is this a cultural issue in the UK – being seen to be productive is simply not cool? I think this may well be true in part, but who is to blame.  There could be a myriad of causes behind this.  However, the sooner it is recognised, the sooner it can be tackled!
–  Is trades union power  still too strong, especially when an organisation wants to reduce staff numbers. The latest tube strikes show that unions are still trying to ‘save’ jobs.  In some cases of downsizing they actively support management, but often only when it is a ‘survival’ issue.  Unions and management need to work better together to build productivity as the key means of increasing individual wealth.
–  Is management up to the task?  Undoubtedly some is, but equally some isn’t.  The successes are self evident. The failures often go unnoticed as companies fail.  Until recently, the public sector and others related to it simply put up prices to compensate for falling productivity!
–  Is there enough competition?  Yes and no.  Three supermarket chains have by far the biggest footprint in the UK. Despite their cost cutting ‘competitions’ they still make an awful lot of money.  There is a lot more competition in the power industry than before, but what about water – we have no choice!
–  Is there insufficient carrot and stick? Think about the huge cost of redundancy.  In some cases it is cheaper to keep staff employed – and therefore less productive.  Has UK law gone too far with redundancy payments? On the other hand, are capital allowances for tax enough to encourage investment in productivity raising equipment?

Overall, I’d say we have a long way to go.  Probably the biggest hurdle to overcome is to admit that UK plc is still woefully behind many of its competitors and that we ‘the people’ are the only ones who can change this.  Are we ‘addicted’ to low productivity?

Is anyone out there ready to take on the challenge?

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