What to learn from the UK’s downgraded productivity levels?

Whatever work we do, it is desirable to be productive. Being productive yields fruitful results. Productivity is also an important factor to determine a nation’s economy. A productive workforce not only contributes to an organisation but also paves a path of progress for the country. A business seeks efficient workforce for an effective outcome. Such a workforce has the power to reap higher profits. In a nutshell, productivity and development rise exponentially with each other.

On the other side, lower productivity leads to dire consequences. It indicates disengaged workforce, reduced growth, and uncertain future. That’s why the downgraded productivity levels in the UK have become a matter of concern for the nation. The stagnated productivity levels have puzzled the economists and authorities big time. The question about how to increase productivity is still unanswered!

What do the figures say?

Productivity is measured as output per hour. In general terms, productivity is utilising inputs like capital, labors, and resources to produce output like finished goods and services. To grow profits, it is always anticipated to gain maximum against the effort and investment. That’s what high productivity is all about. It reflects the living standards and earnings of the people.

The flat-lined productivity levels can be quite a shock to the nation’s economy. It is no higher than previous pre-financial crisis period in 2008. International comparisons give a reason to worry as well. The UK productivity level was around 15.1%, below the average for the rest of the G7 advanced economies in 2016. The difference between post-downturn productivity performance and the pre-downturn trend – was 15.8% in 2016. This gap in the UK’s productivity level was the largest in the G7. And, it was almost double the average of 8.8% across the rest of the G7.

What are the reasons behind this productivity stagnation?

No exact reasons can be ascertained for this lack of productivity. Many economists and authorities have put up their own views and theories to suggest probable reasons behind the weak productivity levels.  Some of them are-

Lack of Skills: Skill-based education at the school and university level is the need of the hour. Unskilled workers tend to do their job with low efficiency resulting in less output per hour.

No Room for Innovation: Private companies and public-sector needs to open their arms to innovation. The conventional methods do not work anymore. To compete on a larger scale, there has to be openness to creative and innovative working.

Less Capital Investment:There is a lack of investment in all types of resources. With limited or old equipment and processes, workers lose their track of efficiency.

Part-time or Contractual Workforce: As a matter of fact, full-time employees are more dedicated to their company. The acceptance of zero-hour contract and temporary workers has affected the productivity levels as the workforce keeps on changing.

Lowered Wages: Post-recession, there has been a decrease in unemployment, yet, productivity is not increased. Labour has become cheap. Hence, companies are inclined to hire them instead of highly-paid roles or use the technology.

Political Unrest: After Brexit’s vote, many businesses are unsure about its effect on their relations. This uncertainty of future has lowered the investment and funding to support profits.

Disengaged Employees: Employee engagement is very crucial. Organisations often fail to motivate and keep their employees engaged at the workplace. Poor leadership also leads to employees’ dissatisfaction.

Wrong Measurement: Quite a possible reason! Other than those considered, many factors influence the method to measure productivity level. This leads to inaccurate results.

Quality of Infrastructure: This includes the roads used for transportation, asset maintenance, and facilities to carry out work. The bad quality of amenities takes up more efforts and time, thereby decreasing productivity.

How to increase productivity and make things better?

The Chancellor, Philip Hammond had announced the National Productivity Investment Fund (NPIF) at the November 2016 Autumn Statement. From 2017/18 to 2021/22, the Government has allocated £23 billion in spending for the new fund to be spread across four main areas: housing, transport, digital communications, and research and development (R&D) to raise the bar of productivity. Apart from that, following could help to improve the current situation-

Focus on Employees

Running administration and business is not only about focusing on customers. The rule of thumb says that employee engagement is very significant as well. To improve productivity, the organisation should encourage high participation of all its employees. The authorities can take various initiatives like one-to-one meetings, social gatherings, health challenges, mindfulness activities and teamwork to involve employees. It will increase the workforce involvement. In turn, they will be more enthusiastic.

Employee-centered strategies help them to think out-of-the-box. It is beneficial for their personal development and the business. As a result, productivity rate is higher when the workforce is more concerned about their work rather than the top-level authorities forcing them to do it. Take care of your employees and they will take care of running the organisation!

Embrace Advancements

To take off to the higher productivity levels, public and private sector have to welcome the technology. In one of our recent posts, we explained how automation will ease the work than taking away the jobs. It will help the workforce to accomplish more work within the allotted time and resources. Technology helps them to complete work in a smooth and fast manner. There is no or minimum scope for errors.

For example, allowing the moving service workers to use mobile apps for receiving jobs on-the-go and instant reporting. It reduces travel time and manual efforts of doing repetitive work. For back-office work, use of bespoke solution supporting automation makes the employees more productive and focused. They are more motivated to do business-critical tasks. The key point is to embrace the advancements and employ technology to enhance productivity.

Balance the Investment

Considering the current situation in the UK, the business concerns are justified. But, to reap productivity, it is necessary to invest in right direction. Like, the public sector should address the demands of better roads, facilities, and services to let the businesses flow smoothly. It will be a wise move to increase funding for research and development, better infrastructure and then expect a superior outcome.

Investing in technology and capital to boost productivity is all worth it. It also indicates paying high wages to the skilled workforce than considering alternatives. A proper analysis can lead to a plan that balances the costs and profits. As the income increases, the public sector can expect high tax revenues and private sector can expect more purchase power. So, at the end, it’s a win-win situation.

There’s no substitute for productivity!

Let’s cut to the chase, no nation or organisation can ignore the productivity downfall. It is necessary to take measures at various levels to prevent further downgrading. The overall progress is possible when we give attention to the needs of the workforce. Then and then only they will deliver a productive outcome. To explore solutions to enhance the working, contact our experts.