Productivity and the workplace
Authors: Ian Brinkley
Senior Economic Advisor
24 June 2015
The Advisory, Conciliation and Arbitration Service (Acas) has released an important statement on the role of workplaces in helping address the productivity challenge facing the UK. The UK has for many years had much lower productivity levels than most other G7 OECD economies and this gap has worsened considerably since 2008.
Policy makers have tried to address this issue through improvements in national infrastructure, investing in education and skills, supporting research and development, and encouraging the adoption of new technologies. All of these remain important. But their combined impact on aggregate productivity performance has been limited. Despite huge increases in the supply of well-educated labour and high rates of investment in and adoption of new technologies – the UK for example has one of the biggest internet economies in the world - our workplaces today are less productive than they were a decade ago.
Something is missing. That something is what goes on in the workplace. Acas has identified seven levers that can help – well-designed jobs, skilled line managers, managing conflict effectively, clarity about rights and responsibilities, fairness, strong employee voice, and high trust. It is the combination of these practices – no doubt others can also be identified - with continued high rates of investment in skills and new technologies that can provide the platform for higher rates of productivity growth in the future.
Acas rightly recognise that they cannot do this on their own and will be looking to engage with other social partner organisations and specialist institutions. Too often in the past we have had institutions tackling the shared problem of low productivity in isolation from each other. We need much better and above all sustained co-ordination and co-operation, allowing the sharing of resources, facilities, networks and best practice. Acas and other organisations have a unique reach into workplaces that central government does not.
The primary responsibility for making this happen lies with business, trade unions, and workforces. But there is also an important role for government. Government can actively support the Acas initiative and encourage the co-ordination of efforts across social partner institutions working with businesses and workforces. We also need to incorporate the increasingly important contribution that can be made at local and city level through for example the new Regional Growth Hubs.
A government supported initiative of this sort does not require additional public funding. It does need active Ministerial support and enthusiasm. The Budget next week would be a good place to signal publicly the new government’s determination to address the productivity challenge by endorsing the Acas workplace initiative.
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