There are many ‘productivity puzzles’ at work in the UK – beyond the headline puzzle of why the UK underperforms on productivity compared to its competitors.
Why do we work longer hours, but produce less in five days than German workers can produce in four? Is this a reflection of poor management, low levels of employee motivation, low levels of investment in systems and processes that could make work more efficient - or all of the above?
Are we even using the right measures of productivity for our services-dominated economy? Does productivity really matter, in the real world, as much as Paul Krugman’s famous maxim suggests?:
Productivity is not everything, but in the long run it is almost everything: a country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.
If we should be concerned about low productivity – if it is, as commentators such as Torsten Bell from the Resolution Foundation contest, the single biggest barrier to resolving the low pay crisis – how can we improve productivity, to the betterment of the quality of work and working lives in the UK?
It should not be taken for granted that the levers for improving productivity are always compatible with the aim of improving job quality.
In recognition of a range of labour market challenges like low pay, lack of opportunities for progression and representation, and worker insecurity, the UK Government has committed in their Industrial Strategy to "continuous improvement in the quality of jobs, with the UK reaping the rewards in terms of advanced growth and productivity."
This is highly significant. It builds on the arguments advanced for many years by organisations like Investors in People and Engage for Success, who work with employers to help them to improve job quality in their workplaces as a key pillar to running a successful business.
However, in the everyday world of work, improving productivity may be understood by employers to mean ‘making work more efficient,’ ‘delivering more with less,’ or perhaps simply (and problematically) ‘working harder’.
One employer might conclude that raising wages will motivate employers to give their best at work. Another might decide to focus on employee engagement channels, so workers feel involved and encouraged to suggest improvements to the way things are done. Yet another employer might decide to bring in stressful and punitive targets or intrusive workplace monitoring – or lay off workers and bring in technology which will get the work done faster.
These hypothetical examples suggest that the links and trade-offs between different aspects of job quality and productivity are far from clear cut. They require further exploration, if we are to develop a coherent set of policies and interventions which can drive up UK job quality and productivity simultaneously.
This is why the Carnegie UK Trust and the RSA are convening a new Expert Group to consider the evidence base on the links between job quality and productivity. We will be working with the Warwick Institute for Employment Research, who will be undertaking new research and providing expert analysis to support the Group’s deliberations.
At the start of this process, we will be bringing more questions than answers to the productivity puzzle, such as:
- what impact do issues such as pay, perceptions of pay, job security, progression opportunities, use of skills, supportive colleagues, the quality of line management and employee engagement have on productivity at firm level?
- when are productivity and the quality of work experienced by employees mutually reinforcing - when are these goals in tension?
But over this summer we will build on the evidence base, sourcing new insights through our Expert Group, and through dialogue with employers to understand the choices they face, to move towards some answers.
We will publish our report arising from this process in the autumn, setting out our ideas for how we can achieve a virtuous circle of job quality-led productivity growth in the UK.
The Quality of Work and Productivity Expert Group will be chaired by Matthew Taylor, Chief Executive of the RSA.
In addition to Carnegie UK and the RSA, and key academics, contributors to the group include the CBI, TUC, Resolution Foundation, McKinsey Centre for Government, and Be the Business.
The Warwick Institute for Employment Research, who will produce expert technical briefings for the process, is a leading international research centre, with over 30 years’ experience of researching the labour market and its relationships with the wider economy.
For more information about the project, get in touch with firstname.lastname@example.org
Why is UK productivity so low? Poor management, low employee motivation, low investment – or all of the above?