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Productivity is a casualty of the culture war


WE are often told that increased productivity is the key to a better future because it allows for higher wages without necessarily higher prices. But how exactly do you improve productivity when there are so many cultural disincentives?

Productivity is commonly defined as the ratio between the input volume and the output volume. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output.

The UK’s record on productivity since the financial crises has been dire.

The Public Sector graph looks better certainly since 2011 but it can’t be measured in the same way as private sector. There was a review of productivity measures in 2007 and the ONS are now apparently a world leader. Call me a sceptic, but do public services feel better to you, dear reader?

These graphs show how politicians look at productivity: at the whole level of the economy. However I don’t think they often look below that level to ask, How do you actually improve it? If they are asked to give examples they invariably say ‘automation is the key’ and use buzzwords such as AI or robotics.

Automation may well help to improve productivity, but someone has to be motivated enough to think about it and integrate that automation into an organisation. In the normal course of events people are busy with their day jobs and there is rarely time or, especially in the public sector, the motivation (in my experience management rarely want suggestions) for improvement.

If there is a specific project to improve productivity, it may achieve something because time, expertise and resources will be committed to it. However the projects I have seen rarely had well-defined outcomes. Normally they went something like this: Member of the board likes the look of something he/she is offered by a flash salesman, buys it and someone installs it. Alternatively department manager has a budget that needs to be spent or they lose it so might as well use it on X. Another catalyst for improvement was a centrally imposed mandate to collect some vaguely defined sum. While initially it would be me and my team who decided exactly how to get it, that work got thrown away because the requirements/format changed dramatically. Weirdly, these ways of working didn’t lead to productivity gains often.

Human Resources is a whole other level of hindrance to productivity. Health and safety and risk assessments (don’t get me wrong, in many circumstances these are a good thing) could put the kibosh on any fast short-term innovation and push up costs, making organisations way less reactive.

HR has also more recently meant the Equality Act 2010 and its protected characteristics. Now we have ‘unconscious bias’ training and advertising for or fast tracking a particular characteristic into higher positions. If you look at this from a productivity perspective, you are telling the majority of the workforce that they are racist, and that you want fewer of them there, and however good they are if they don’t have the right characteristic they are less likely to do well. Hmm . . . if any of these people felt inclined to innovate to improve productivity for an organisation, do you think they will now?

Now it seems the emphasis will also increasingly be on going greener. Which is going to be more expensive and less reliable. I really can’t see how productivity improves in this scenario.

If you actually want to improve productivity it is about getting the best out of your people, rewarding bottom-up innovation and on merit. (Incidentally, merit is not about having a good degree: it is about getting good outcomes.) Today this would need a revolution in workplace culture. The Equality Act would need to be repealed or at least reformed, other workplace regulations would need a review, management culture would have to incentivise productivity gains, certainly at a departmental and organisational level and also at an individual level. Oh, and let’s not forget valuing existing employees over cheap imported labour.

Right now we seem to be going in the opposite direction, heading for a Universal Basic Income because apparently British people are lazy . . . No, they are not. Our current culture does not allow people to do a decent job and be rewarded for it. We have given up on improving productivity and almost given up on work.

The culture war and associated legislation, and the working practices it encourages, are very closely related to productivity in both the public and private sectors, and I believe are likely to get ever more so unless we change course. Without that Britain will struggle to stand on its own two feet in the world and will not improve public services.

A longer version of this article first appeared on Sparcatus on October 26, 2021, and is republished by kind permission.

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