Our productivity problem won’t solve itself by magic, Britain needs some real ambition
Yesterday, UK business leaders gathered at the CBI’s annual conference to address how the country can achieve long-term growth in the face of tough economic conditions. As these headwinds continue to gather pace, UK productivity is weak. For over 80 per cent of business leaders, the next three years will be the most challenging they have faced.
Boosting competitiveness is critical. Cutting costs is one option, but a better solution is boosting employee productivity.
Low productivity in the UK is not a new phenomenon. We have lagged other Western economies for more than a decade. But as a key enabler of future growth and competitiveness, now is the time to look beyond the economic doldrums and focus on lifting the UK out of its productivity slump.
British business showed its resilience during the turbulent times of the Covid-19 pandemic. Global operations and complex supply chains were transformed with unparalleled speed in response to the challenges brought by sudden lockdowns and seismic changes to working practices.
And while UK businesses are facing a crossfire of headwinds, many are still confident in their resilience. UK firms remain more positive about the future than any of their European peers. This determination must be combined with a political focus on kickstarting our economic growth, to give us the confidence that industry can adapt.
Rishi Sunak, in his keynote speech yesterday, acknowledged the challenge we face in fixing the producitivity slump we’ve seen since 2008.
For the moment, businesses need to make it through the short term challenges without forgoing plans for the next growth cycle. This will keep us competitive, but we also need a new approach to productivity.
Gone are the days when we can simply ask employees to work harder or longer. As we move from one crisis to another, many employees are feeling overwhelmed and fatigued. Instead, businesses must ask how they can help their people work smarter.
Recent research from Accenture and Frontier Economics found that, by building their digital capabilities, the UK has the potential to add £33bn to national output in 2030 – adding 1.5pp to growth and more than doubling the forecast rate of economic expansion.
It will require organisations to overcome a vicious, failure-inducing cycle which bugs digital transformation projects: weak ambition, low investment and tentative delivery. But doing so will enable them to adopt and exploit a new wave of technologies which can revolutionise productivity up and down their supply chains. From machine learning to extended reality, new tech can help workers overcome the time, distance and knowledge gaps that weigh on productivity.
Realising this potential is not a walk in the park. These capabilities rely as much on human ingenuity as they do on technology – so creating a culture of change to enable employees to reimagine their work and investing in upskilling cannot be overlooked.
Getting this right will provide an invaluable boost to the economy during tough times, but it will also ensure businesses are in the strongest possible position to support themselves, their customers, and the wider economy, by reinvesting in upskilling, talent retention and local economies to support regional growth.
It’s high time businesses stop expecting output to grow of its own accord. Neither their companies nor the country can afford to wait.