With the all the discussion around our growing economy, you would be forgiven for assuming that the move out of the recession has come from an increase in productivity.
Since the start of the recession productivity in the UK has remained very low, the Office of National Statistics estimates 15% below the pre-crisis trend.
And we do seem to be alone on our little island in this. Our levels of productivity sit nearly 20% below that of our European neighbours and 30% below those of the USA. Including countries known for their daily siesta’s and without our Sunday trading laws.
It may be easy to attribute this drop in productivity in certain industries. Financial services for example, has undergone many changes including much stricter regulation. The banking crisis placed a magnifying glass on the big bucks salaries and bonuses. Equally productivity in these areas dropped as confidence dropped.
But for many other industries, the drop in levels of productivity are puzzling to say the least. There is even a website dedicated to sharing the latest ideas and articles around the subject www.productivitypuzzle.com
Lets consider some of the suggestions:
- With years or pride of trade in the London financial markets, did the drop in confidence in the financial services industry impact on productivity in the country as a whole?
- The impact of the Baby Boom generation are changing the definition of the term ‘retirement’ – 1.2 million people aged 65 or over are working, along with migration to our shores, mean the number of ‘working age’ people in the UK has grown.
- Have we formed a ‘fight club’ style agreement (the first rule of fight club? you don’t talk about fight club) from the recession that what work is available will be shared amongst many?
- Has/will the National Living Wage have an impact on wage rises in general, as businesses manage the transition to the higher wage for those over 21? 1.8 million workers will benefit from the NLW in 2016, however the cost could be felt among particularly small and medium sized organisations across the UK. Less pay rises = lower morale = drop in productivity
- As we wait with baited breath for the outcome of the BREXIT debate are people ‘treading water’? Putting off making decisions about where they work and live until the final outcome is announced?
But should we even be concerning ourselves with this single set of statistics?
Businesses are learning that they must be more flexible and agile to cope with the rapidly changing economic environment and technological advances. Employment is rising.
More and more people are taking their employment into their own hands. In 2015 there were 5.1 million micro businesses in the UK, which means organisations employing less than 9 staff accounts for over 95% of all businesses*. Way to go us!
Suffice to say things are changing at a much faster pace than they did pre-recession, and relying on statistics that are usually several months out of date when they are released can cause more speculation than useful information.
*House of Commons Business Statistics