High quality jobs and a strong employee voice are crucial for sustainable, fair productivity growth
The latest UK productivity figures may have reported a welcome rise, but they do not detract from the urgency of addressing the longer-term story of poor productivity, and ensuring that productivity growth is sustainable and fair.
Output per hour is still below pre-crisis levels and 15 per cent below where it would have been if the pre-2008 trend had continued.
In his recent Mansion House speech, George Osborne spoke of the need for Britain to address its poor productivity record and confirmed the government’s intention to announce a ‘productivity plan’.
UK productivity, particularly, since the crash, has been the source of much recent debate and attempts to crack the so-called ‘productivity puzzle’.
There are a number of drivers of productivity including education and skills, infrastructure, equipment and innovation. But investment is key. Osborne acknowledged in his Mansion House speech that we don’t export, train, invest, manufacture or build enough.
Improving productivity also requires better work organisation and recognition of the importance of strong employee voice, a point emphasised in a recent report by ACAS.
This is why Unite has written to the chancellor to urge a dialogue among all parties about how we address the UK’s poor productivity performance, a dialogue that must include trade unions as representatives of millions of employees.
In the letter we point out that Britain’s best-performing sectors on productivity include car manufacturing, aerospace and other engineering sectors which have a very high level of union density, and where trade union involvement has been central to the improvements secured.
When the government praises the success of the UK motor industry, for example, it should not forget the contribution of Unite representatives.
Recent analysis by the National Institute of Economic and Social Research finds evidence that ‘unionisation may be beneficial to workplaces seeking to improve their performance after the recession…counter to the proposition that firms benefit from a highly deregulated and non-unionised environment.
Furthermore, research I have conducted with Kim Hoque of Warwick Business School, Nick Bacon of Cass Business School and Neil Conway of Royal Holloway also shows the positive effects that workplace union representatives can have in improving job quality which can lead to higher productivity.
The government’s commitment to continued austerity will undermine otherwise worthwhile initiatives to encourage investment. The TUC has reported on how austerity has held back productivity and the OECD recently highlighted how increased demand and investment are critical to improved productivity, wages and competitiveness.
Further austerity will only serve to damage productivity growth.
That aside, policy and action needs to recognise the critical role that investment in workers, their workplaces and the infrastructure they use has for improving productivity.
Attacking trade unions distracts from the key priority of improving productivity growth, and also seeks to marginalise one of the key players in addressing the problem.
Sustainable improvements in productivity growth will not be achieved by trying to squeeze ‘more for less’ out of workers, extending the ‘flexible’ labour market or making work less secure.
What’s needed is an active industrial strategy that includes:
- investment in infrastructure, equipment, services, skills and innovation
- better work organisation with worker and trade union input
- well-paid, decent, secure jobs
- rebalancing the economy away from an over-reliance on financial services
- reform of the banking system to ensure investment in the real economy
- corporate governance reform to end the short-termism that inhibits investment.
Government policy and action has a clear role to play in delivering productivity growth and shaping the strategic direction of the economy. And trade unions have a key part to play in meeting the productivity challenge and ensuring that there is sustainable and fairly distributed productivity growth.
John Earls is head of research at Unite