The Productivity Puzzle Part 1 (ominously)
January 18, 2018
Now that the festive season is behind us it’s time to refocus all our attention on working as hard as we possibly can to be the best that we can be. We’ve all enjoyed ourselves in the lead up to Christmas but now it’s back to the grindstone with that nose of yours and look into productivity.
I’m guessing that a large proportion of the working population will have had a sense of the above after the Christmas break to greater or lesser degree. In some cases, this sense will have been put over to them by their employer, in others it will be a general feeling that the individual has as a natural response to the new year now that the fun is over, and reality has hit back.
It may come as a shock therefore, to know that January is generally a very productive month in the UK as this accepted refocus on work takes place. Be honest who thought that was the case?
Anybody in business will be aware of this thing called “productivity”. Let’s be honest it’s almost impossible to avoid as barely a week goes by at the moment without the press banging on about it. It would be interesting to know just how productive “productivity” is for those that report on it.
The simple fact (apparently) is that as a nation the UK isn’t scoring particularly highly, and nobody is quite sure why. Which is puzzling given the amount of time spent on the subject. The problem is that there are potentially a number of reasons as to why this may be, but no one can decide which one is the main cause.
Now I’ve done the research so you don’t have to but if you have a burning desire to look into this kind of thing then I can recommend the giddily titled Office for Budget Responsibility as well as the good old fail safe that is the Office for National Statistics. Two organisations whose names alone make you think of wild time and shenanigans. Interestingly, their websites and reports can be used by those who require surgery but are allergic to anaesthetic as an incredibly effective way of dulling all your senses.
So, the key points from the most recent reports from these two organisations are as follows;
- Productivity in the UK is 15% lower today than it was pre-financial crisis
- UK Output per Hour is 15.9% lower than that of the G7* average
- UK Output per Employee is 16.6% lower than the G7 average
There are a whole range of theories as to why this is. Ranging from a shift from “productive” industries (i.e. construction) to “less productive” industries (education). Or that there has been an increase in part time working, that wages have stagnated or, and this is genuinely a possibility, that they don’t really know how to measure it and the maths are all just wrong and actually everything is fine.
In reality dear reader, I would suggest that these national trends, although important and interesting, are too wide reaching and generic to actually be of use other than to give us all some context. There is no doubt that efficiency and productivity are two areas that all businesses should be focussing their attention. The simple reason for this being that if you get it right it will pay dividends, literally.
If you haven’t already done so I would urge all owners, managers, directors, sole traders or whoever to start looking at where efficiencies and productivity can be improved. Is it greater mechanisation? Is it a lower turnover of employees? Is it, controversially, losing a few? Is it the management that are the biggest issue? One thing that most of the reports agree on is that the problem is “structural” not “cyclical” which means that it won’t just go away and everything will get better if we just hang around long enough.
So, let’s embrace this productive month of January and be proactive in shaping our strategy for greater productivity and buck the agreed (possibly) UK trend and make sure that your business is as productive as it can be – cue rousing music (probably Elgar), some form of flag wafting, sunshine and smiling faces all round.
In the meantime I will be productive and crack on with Part 2. Possibly. Maybe. At some point.
If you would like to discuss productivity in more detail, or you would like to speak with a member of our team, please contact 01772 821021 to be put in contact with a member of our Financial Planning team.
*G7 – Canada, France, Germany, Italy, Japan, UK, USA