What's the problem with British Productivity?

[OfficeHounds]

"The Bank of England says productivity is 16% below its pre-crisis trend - but says it is at a loss to understand why."*

1. Why is British Productivity so low?
2. How can we fix this problem?
3. What are your personal problems with productivity?

Have your say! Tweet with the hashtag #BritishProductivity
I'd love to hear from anyone with expertise in understanding what's going wrong on a large scale, but let's also talk about our own individual challenges with productivity.

Join the debate live today at 4 PM

Watch the event live or playback on officehounds.com/whats-problem-british-productivity. Join the discussion. Add your questions, comments, reactions on my page.
<link removed by Moderator after it got dropped again in this thread>

OR

Tweet with the hashtag #BritishProductivity

*Read More (Source BBC 'Bank of England 'puzzled' by productivity gap')

What's going on here?
It's really odd. I decided to use the #hashtag #BritishProductivity on Twitter. The last time and only time it was used was in 2012! I was really shocked that hashtag hadn't been used more! Don't we care about Productivity in Britain? Surely we do care!

 

[Excel Expert]

Without knowing what the measure covers it is hard to understand. They normally take things like exports and factory output in to account, which makes me question how relevant the numbers are.

As a nation are we as reliant on factory output today as we were in the 60's (for example) or are me more reliant on digital goods and IT which now employs millions of people. I dont know if it has or hasnt, but have the calculations been updated to reflect that we are now a post industrial country.

 

[That Bates Girl]

let's also talk about our own individual challenges with productivity.

aside from spending way too much time on UKBF you mean

 

[OfficeHounds]

There's info in the Financial Times about this. But you're right that the nitty gritty of the stats are important.

But it does seem to be a recent downward trend. "When one looks at the standard measure of how much economic output a worker generates per hour, the UK is still four per cent below pre-crisis levels and 16 per cent where it should be if the pre-recession trend had continued." Financial Times http://blogs.ft.com/money-supply/2014/06/16/uk-productivity-puzzle-the-bank-of-englands-answers/

I get what you're saying about post industrial, but it seems that all is not well.

 

[Excel Expert]

Totally agree with you OfficeHounds, the post industrial thing is just one aspect that we have to take in to account when looking at the accuracy rather than the overall trend of the figures.

Most western countries are going through this transition from industrial to digital and we are all having to adjust the way we look at our key performance figures as a country. How much of an effect it has had probably wont be known any time soon - it is one for the future historians to look at.

 

[KM-Tiger]

Do zero hours contracts have any effect on these figures?

 

[OfficeHounds]

Forget the Industrial Revolution....this century is all about the Digital Revolution. Like it. Like the optimism, too.

But it seems these figures factor on digital. The figures include output of both products and services. "Labour productivity is defined as the quantity of goods and services produced per unit of labour input. Since the onset of the 2007–08 financial crisis, labour productivity in the United Kingdom has been exceptionally weak." Bank of England (Download the pdffrom Bank of England)

 

[OfficeHounds]

KM-Tiger That's a very interesting point about Zero hours contracts. From what I've heard, they seem to have been on the increase. Interesting point.

 

[webgeek]

After you've spent all your time figuring out the regulations governing whatever it is you want to do, from pouring a cup of coffee to demolishing a skyscraper, there's not time left to actually do the task.

But if somehow, by magic, you get the time, you can rest easy knowing that it'll take you twice as long to figure out how to pay all the government departments after you're paid for the work.

If everyone just paid the government directly, and had them do whatever they needed done, we could all just sit on the couch and eat bon bons while watching daytime soaps.

 

[fisicx]

"The Bank of England says productivity is 16% below its pre-crisis trend - but says it is at a loss to understand why."*

It's because everyone wants to sit behind a computer doing social stuff rather than actually making something.

 

[Nuno]

Traditionally services are seen to have lower productivity increases than manufacturing. This, together with large productivity gains from computerization already having been captured in major service industries mean low service sector gains.
Productivity gains in manufacturing have longer lead times dependent on investment. It may be that the relative lack of investment 2008-2011 means no gains have fed through yet. (Britain has suffered from low investment for longer than that time window, that is used merely as an example.)

However I also like the explanation from an analyst at Nomura:
"That tells us more about the sorry state of economics than the economy itself "

 

[Tony King]

I can only speak from experience in my sector - warehousing and distribution.

When we advertise for warehouse work - we get very little uptake from British born people - but massive responses from other EU countries. Also - the attitude is completely different - EU workers do not ask about shifts or weekend working - but more - 'can i do overtime and what can I train for' - British born tend to say ' I can't work these hours or these days - and I can't get up that early!!'

I think zero hours is an interesting area - but we find - reward the guys who are most productive with additional hours and the productivity looks after itself.

I would also agree - from previous lives - that a lot more 'desk bound' jobs seem to have materialised rather than manufacturing - and we do seem to have grown into a 'service' based nation!

Sales and sales support and marketing and advertising and web based research and system generated polls and, etc., -

For my industry it is quite simple - how many cases did we pick / pack this week and how many hours did it take! When this is combined with accuracy and delivery on time - i can mesure my service levels and my productivity very easily.

If you then take into account - Engineering standards you get a very accurate picture.

HOWEVER - although health and safety is paramount - the claim culture has made some jobs almost unworkable - and has definitely reduced the amount of direct labour and increased the indirect - affecting productivity down!!!

just my views - interesting to hear others.......

 

[OfficeHounds]

Nuno interesting what you say about lack of investment. The Bank of England did say that one of their hypothesis was that equipment wasn't replaced due to lack of funds/investment available.

Tony - very interesting what you said about EU workers vs. British. So, sounds like maybe cultural values have a big impact. Possibly British people value their free time and independence from work more than money, or at least noticeably more so than the EU workers you have encountered. I caught in the Bank of England report that the number of self-employed folk has risen by 600,000 since 2010. That may be a reflection of an increasing number of people seeking that sense of independence. (Although, as we all know, running a business is super hard work and you often have less free time than in full time employment.)

I did a Google Hangout earlier today to share my thoughts on productivity. You can catch the recording here. officehounds.com/whats-problem-british-productivity <link removed by Moderator>

It's nice to have such a clear cut way to measure productivity within your warehouse business. I think it's good for any business to try to find ways to measure productivity to help improve performance, but it's not always so easy to know how and what to measure.

 

[OfficeHounds]

After you've spent all your time figuring out the regulations governing whatever it is you want to do, from pouring a cup of coffee to demolishing a skyscraper, there's not time left to actually do the task.

Regulation and bureaucracy can certainly slow things down! No denying that.

 

[telemax]

I think that Employers during this recession were a lot keener to hold onto their staff than the last one (early 90's). Lessons were learnt from then about how difficult it was then to re hire good staff when the recovery hit. Less work + Same number of workers= productivity down. It's a lagging indicator, as the recovery takes hold and workload increases , productivity will rise.

 

[OfficeHounds]

That makes sense.

 

[Jeff FV]

Tellemax has hit the nail on the head.

Also, what would be interesting would be how productivity as a function of wages has changed, rather than (as you are discussing) productivity as a function of number of workers.

Re: the difference between EU & British workers, you need to be careful with sweeping statements about cultural differences etc. Migrant workers are by their very nature those with "get up & go" and so will be more willing to work longer hours etc. I suspect that there are just as many who "value their free time and independence" back in their home country as here in the UK

 

[Excel Expert]

I would like to put forward a different view on the UK v's EU workers.

Do EU workers get as easy access to benefits as UK workers? i.e. do they have to be more self reliant than the average British worker?

I know there are plans to place all sorts of limits on benefits that immigrants can claim as of this year, I just cant work out what the current situation is. Do they have to be in the country X months before they can claim? It could go someway to explaining some of the differences

 

[OfficeHounds]

Hi Jeff - totally agree that sweeping statements can be a bad idea, that's why I said, 'possibly' and 'or at least noticeably more so than the EU workers you have encountered.' Just trying to explore why the productivity figures are so low and Tony King's comment about his person experience of hiring British and EU workers. Very good point that immigrants by their very nature are risk takers and may have more get-up-and-go then some of their countrymen at home.

Carl - I don't know how soon EU workers are eligible for benefits when they first move to the UK.

 

[Tony King]

Spot on Carl - a lot of the UK guys are quite open and say ' why should I work 40 hours a week for not much more than my benefits!'

I wrote an article a while ago suggesting that workers not be penalised by working - and that employers should (in line with the Government) make sure they were not. i.e. if someone is claiming the equivalent of £300 per week (housing, income support, poll tax, etc.,) and an employer can only pay £250 - then the government should still pay the additional £50. if the person refused - cut all benefits.

To me it's a win win!!!

i live in an area where some families are ion the third generation of ' never worked' and the school kids go straight onto benefits with no intention of working - as their main role models never had!

This cycle must be broken and it may take radical thinking like my idea to get there!!!

 

[telemax]

Spot on Carl - a lot of the UK guys are quite open and say ' why should I work 40 hours a week for not much more than my benefits!'

then the government should still pay the additional £50. if the person refused - cut all benefits.
!!!

They do, it's the working Tax Credit.

 

[Excel Expert]

Telemax - do they cut the benefits if work is refused though? I'm not up to speed on the benefits system as it is today so I'm not sure what happens in that scenario.

I know the government has made noises that it wants to implement that sort of system but I've not heard of it being put in to action.

 

[Jeff FV]

Anyone from within the EU has to be treated the same as any other member of the EU, therefore someone landing on our shores (from within the EU) today has the same rights as someone who has lived in the UK for 30 years and, similarly, a British citizen could pitch up in, say, Germany and have the same rights to benefits as a German.

Part of the problem for the UK is that our benefits (& NHS) are not based on contributions, I.e you can claim benefits from day one. Other EU nations require you to have paid into the system ( by, say, working in the country for 3 years) before a claim is made. This is the same for their indigenous population and migrants from the EU.

 

[Tony King]

Well - I am no expert on the benefits systems - I go from the responses we get from hundreds of applicants every year.

Whether it be an excuse or reality - our experience shows a lack of 'get up and go' from too many people.

 

[Jeff FV]

Well - I am no expert on the benefits systems - I go from the responses we get from hundreds of applicants every year.

Whether it be an excuse or reality - our experience shows a lack of 'get up and go' from too many people.

I don't doubt it. The point I was trying to make (albeit rather badly) was that the applicants you encounter from the EU have had the "get up and go" to seek better opportunities in the UK and so are likely to show a "get up and go" approach to all they do in life. Unfortunately it is now too easy for too many of our indigenous population to "blame the immigrants" for them not getting a job, rather than their own lack of drive and ambition.

 

[The Byre]

1. Why is British Productivity so low?
2. How can we fix this problem?
3. What are your personal problems with productivity?

I couldn't think of an easier question to answer -

1. Why so low -

* Low taxes and low wages, so it is easier to throw labour at a task, than using machinery.

* Poorly educated workforce with low levels of technical ability.

* Poor quality and amateurish management, i.e. more PPE and history grads, than MBAs.

* Management with little grasp of how to motivate staff, such as running child care schemes, in-house education, clear and well defined in-house paths of promotion, Christmas bonus schemes, staff share-holding schemes, pensions and many other things.

* Idleness. Getting most workers and even employers and middle management in the UK at any level to actually put in a real eight-hour day (as opposed to just being there for eight hours or even longer) is like drawing teeth for some people.

2. Fix -

* Dump all the bogus degrees, reintroduce three-year apprenticeships and make science and maths compulsary up to GCSE and A-levels.

* Free university education for tech and science subjects and introduce quotas for the others.

* Pay university lecturers properly and insist that they have at least ten years industry experience.

* Start with number one - yourself. Set yourself goals for each day/week/month. I'll start now by getting back to work . . .

 

[Tony King]

Fair point - the problem does seem to me endemic - and generational!!

My eldest lad is 16 - just finished exams - and went straight out with his CV and landed a job the second day! Albeit only a summer job as a waiter in a hotel, until he goes to college in September. The owner is so impressed with his manners and attitude he wants him to stay after the sumer and do weekends and functions.

Mind you - his role model is me! So he may have done it just to keep from working for me!

 

[jamjam11]

Part of the huge problem is corporatism, {Merger between Gov't and corps} This is huge problem that started within the EU and has gripped the USA by force.
Next up is the fascist politicians who understand that in order to steal wealth someone got to generate it, i.e the Capitalist.

Britains got one of the best democratic systems in the world and thanks to Thatcher keeping socialism NOT out of politics, Rather the level it got kept too ensured people that Dick Cheney {Vise president under Bush} that stole over 1.2 billion dollars worth of contracts and just handed them to his old firm Halliburton for rebuild work in Iraq, Work i might add that the marine core should've been doing. A complete stroke of taxpayers money {FASCISM}

So corporate greed mixed with gov't with fascist politicians and to add extra insult a monetary system that will bail out not only these failed corporations but also failing banks will ensure what you're seeing today. No innovation mixed with hundreds of tiny bubbles in the market and regulations that drove the manufactures like myself clean out of the western world.

When did the politicians become businessmen? People are to blame, They walk about in a daze and can only see 2 foot in front, Blinded by shiny objects of desire falsely advertised to by us to make sure they don't think on a rational basis while taking away freedom of choice by crony capitalism. {Coke or Pepsi} {Iphone or Samsung}

Here's an interesting fact, In the past 200 years with heavy industry we've managed to munch through half of the worlds natural resources. Less fish in the sea less trees in the ground less less less.

Communism failed first, I would love to try pure capitalism but unfortunately corruption/corporatism/fascism/crony capitalism and socialism will never allow us to.