Here are the real reasons we have a productivity crisis in the UK

Our workforce is undereducated, exploited and demoralised – it's no wonder productivity is dropping.

Revised figures for economic growth and productivity dominated Philip Hammond’s budget. Do UK workers have a ‘productivity problem’?

With the news that Britain’s levels of productivity are dropping, pundits were quick to roll out the tried and un-tested “it takes German workers to produce in four days what a UK worker produces in five” – with the inference that British workers were basically ‘lazy’.

Two years ago, seeing that productivity was flat-lining, the Tory government commissioned reports as to what the problem last year introduced a ‘productivity fund’ (which was topped up this time around) in the hope of kick starting things. It doesn’t appear to have worked.

At around the same time Unite the Union commissioned a study comparing the UK productivity with Germany, France and the USA. Its results were startling.

Germany is perhaps the most useful country to compare to the UK. Unite’s report found that one of the most significant reasons for Germany’s high productivity rate is the fact that they have a highly skilled workforce, which Germany’s government have invested a lot in.

More than 80% of their workforce have received formal vocational training or are in possession of an academic degree – all of which has a foundation in their “dual vocational system”, where vocational skills and training runs alongside academic training.

In addition, German companies invest for the long term and employees know this. Another key factor is keeping production “in house” – they have an aversion to off-shoring to low cost countries – all coupled with concentrating on defending and enhancing their core manufacturing businesses.

The much vaunted “Mittlestand” of medium size companies and the supply chain who rely on work from larger companies and are protected was also cited in our report as another reason for German high productivity. 

German companies also work with their unions and workforces. Unions and works councils are required to be informed and consulted and are part of the decision making structure right through to Supervisory board level.

Compare this to the UK where apart from a few notable exceptions, unions are kept at arms-length by employers, workers opinions are not sought, and where decisions and investment are made over the short term.

One major employer told me recently: “If you are a technician in BMW, Siemens or Bosch in Germany, you are seen as being a highly skilled professional worker with a long term future – you are somebody.”

It is worth remembering that in Germany workers enjoy shorter hours and longer holidays and have strong trade union structures, whose voice is listened to and not derided.

Compare this with the UK with zero hours, hire and fire – insecure employment, endless agency working with little prospect of a permanent contract.

Would anyone wonder why we have poor productivity? Would anyone show loyalty and dedication to any employer that they may not be working for within the next few weeks, months or years?

In order to develop a highly productive, highly skilled manufacturing economy, Unite has argued that we need to develop strong structures for Information and Consultation – the involvement of workers and Unions in decision-making, where their views, opinions and expertise are listened to and respected.

Our government also needs to increase investment in advanced manufacturing in the same way that Germany, France and the U.S. has done. 

The government needs to make skills and apprenticeships a much high priority: they need to up-skill workers and develop a system to retain and recruit highly skilled workers in the supply chain – thus defending the manufacturing sector and avoiding the splitting up of highly skilled and highly trained workforces.

If UK productivity is to break out of the ‘malaise’ it has fallen into and to avoid ongoing stagnation, the government needs to talk to unions and workers about the way forward, and invest in education – rather than simply implying UK workers are lazy.

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5 Responses to “Here are the real reasons we have a productivity crisis in the UK”

  1. Michael

    There was a similar report from the DfES making much the same point – in 2002. the Tories have never valued VET. the German system is the best, or second best in Europe, except, perhaps for Sweden.

  2. Roland

    I do not disagree, but this article would be more convincing if it included data showing the trends in productivity in GB and main competitors.
    Furthermore, it would be useful to warn of the danger of focussing on productivity ALONE. For instance, productivity in France is higher than in GB, but French unemployment is also much higher.
    It is unwise to measure the performance of a country, or an organisation, or an individual using only one metric

  3. Dave Roberts

    There is training but in useless degrees. What are needed are bricklayers, carpenters and other building trades not people with diplomas in flower arrangement.

  4. patrick newman

    If you want a strategy to boost employement and productivity try the FE sector that needs reviving and there are currently 790,000 NEETS who could be offered work and/or training (Paid at or near min wage). However, Labour needs to think big and abolish the Chancellor of the Exchequer along with the Treasury – to them everything is a cost to be minimised and everything is short term. We only need a finance department to keep the score and finalise budgets. What is really needed is a department (at No. 11) of business, the economy and strategy with senior status in the cabinet. While the Treasury dominates with their sophisticated version of the money tree ‘problem’ an industrial strategy will not be worth the paper it is written on.

  5. Dave Roberts

    Patrick Newman. What, more diplomas in flower arrangement. A long time ago I went to a technical college on day release when I was an apprentice bricklayer. In the eighties and increasingly into the nineties these became colleges of technology, the craft trades were dropped as they were too expensive and easy degrees came in. Semi privatised, these colleges had to show a financial return and churned out hundreds of thousands of people with computer skills that were almost immediately obsolete.

    The same space that would house a dozen brickies or carpenters building models could accommodate a hundred people on a computer who in six months would have a certificate in something or other which could then be trumpeted as training. Useless of course but expect more of the same from Labour.

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