What Is To Blame For The UK's Low Productivity?- Hot Topic

The UK's productivity is something which can be highly debated about, mainly due to the fact that in recent years it has been surprisingly low, and not showing many signs of an increase. It has been mentioned in the news, and not to talk about it being a very 'hot topic' between K and I, and within our AS classroom.

So for starters, what is productivity?

Productivity is an average measure of the efficiency of production. It is the total output per man per hour. 

Productivity has a great impact on the amount an economy is able to produce, and also determines the amount of growth which an economy can experience as a whole. High productivity means that an economy like the UK can produce more goods and services, which can then be available to sell. By exporting these products it can help reduce a balance of trade deficit (when the amount of imports is more than exports). 

It was reported that productivity in the private sector dropped to its lowest levels since 2005, as companies continued to hire new staff, despite there being a reduction in the demand for goods and services.  It was then said that the output per hour of private sector workers fell by almost 4% reported by the ONS. 

These figures are in no way promising to the economy, and it raises the issue which frequently makes me question - what exactly is causing this slump in productivity?

For starters (and in my opinion), it is the work ethic which we have in the country which really pulls the UK behind many other countries. This does not apply to all, but in the UK, the motivation to produce more and work harder is not present in comparison to countries like China and India. Countries like this are able to maintain extremely high levels of productivity which benefits the country, and makes them more internationally competitive, as they have more goods and services to offer. 

The amount of work man is producing in the UK per hour is not living up to the standards of firms, and it is these firms who should be the ones to take action. If they want to see their workers being more productively efficient, then they need to promote a higher standard of working expectations. This could be done by rewarding staff more and using forms of encouragement to increase their amount of labour per hour.

The increase in productivity could see a rise in the aggregate economy if more firms choose to adapt to this hard working lifestyle. 

However this is easier said than done, and despite many companies taking to this style of work morale boosting, it doesn't have the desired outcomes as productivity still remains shockingly low. So instead of trying to help the work force grow and promote workers to increase their output, are the workers themselves in the first place the issue? Should firms look into investing in more capital machinery to increase productivity? 

Well as harsh as it sounds, replacing workers where machinery can be used would definitely have an impact on the amount produced, and firms would see their prices shrinking as they wouldn't have to be concerned about paying as many workers. It is however due to the welfare of society that firms use every opportunity to create jobs as the unemployment rate is tremendously high at around 7.7%.

And it's not just the workers who suffer from investing in capital machinery. Firms have been faced with difficulties when trying to invest in capital machinery as banks are less willing to lend out money to them. This again creates more difficulties, and puts productivity at stake of growing. 

Paul Gregg, a labour market economist, said that companies could be opting to hire more staff for extra shifts, and to delay purchases in new machinery. But would this be a bold move?

By companies choosing to employ more staff would mean they would have to face more costs, and have the same issue of low output per worker per hour, yet just on a greater scale. In the short run shouldn't firms aim to invest in capital machinery to help boost productivity  and maybe even use that as a wakeup call the potential employees that their job can be easily replaced? It may sound radical, however at a time like this, anything is needed to try and help the UK economy recover. 

Also should it be that the government continue to try and invest in the younger generation of today? If enterprise and business incentives are introduced at a young age, then this could give us hope for the future of our economy, as younger people are being trained from a younger age on how to address the current situations we face today.

There has been no immediate reaction by the government to try and recover the UK's low productivity, however the sooner they react, the better, because in the long run, it would damage our ability to trade effectively, and weaken the image of the UK economy as a whole.

Photo taken from google images

Thanks for reading, and please leave your comments down below on what you have to say about this 'hot topic'

T
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