The British Problem – Productivity and Manufacturing!

 

(Productivity is a measure of the efficiency with which available resources are used in production).

Current debates about rebalancing the economy and the ability of the country to compete in the global market constantly highlights the low current productivity levels in the manufacturing industry. The need to increase exports significantly in the future is crucial to this endeavour. International surveys over many years have shown consistently that we lag well behind most of our international competitors. For example for the G7 nations Britain was on average 17% less productive and an often quoted statement is that France is 20% more productive than this country i.e. they achieve in four days what we do in five.

The OECD report in 2014 also highlighted that the country had become even less productive, decreasing by 3% per hour between 2007 and 2012. Even accepting the complexities associated with the factors in play when defining and measuring productivity and the confusing array of the resulting statistical interpretations, the reality is that the country is performing poorly.

A recent report has identified the need to increase exports to £1 trillion by 2020, but the indications already show this target is unrealistic and is very unlikely to be achieved falling short by at least 30% There are a wide range of complex and interconnected causes in play creating these problems, including low investment in research and development (R&D) and poor innovation and creativity skills. The solutions will take a long time to reform and implement and will require radical approaches, free from political dogma and micro-management. One essential element is the need to develop high quality technical education and training following these reforms and again the FE sector must be significantly involved.

So what are the factors that have created low productivity? As already mentioned there are many dimensions, including the inadequate resourcing and support of technical and vocational education and training. The country operates a low skill/ low wage/high employment policy, which increasingly depends on immigrant workers, who are prepared to work for low wages. Other factors include workers’ motivation, the work environment, pay, conditions of service, the paucity of CPD and the quality of leadership and management. Recent surveys show that a large number of office workers spend a great deal of the working time using the internet, Facebook and twitter for their own purposes. This is a very sad statement about the workers commitment and loyalty to the company and also reflects poor management and supervision. This contrasts with the China when a recent survey showed that 60% of the Chinese workforce work overtime voluntarily.

Many commentators argue that to maintain a productive industrial base, some unemployment is necessary but also underpinned by an effective and efficient technical education and training system. Investing in our own education and training system is essential. After all, I would argue that taking people from abroad can be seen as unethical, where often poorer countries have invested in their own people and then to see them poached by richer countries. I accept that social and economic mobility is a fact of globalism, but there has be an understanding of the wider issues in recruiting overseas people including the ethical ones.

Clearly if a reformed and effective manufacturing base is established by this government, then the issue of low productivity must be addressed recognising the complex mix of factors that creates it. This would also have significant impact on the technical and vocational curriculum in FE colleges which will require colleges to inform students of the issues involved: the rationale for greater use of work experience programmes and the creation of realistic working environments in colleges would provide students with a greater understanding of the work place and the factors that contribute to low productivity and how they can improve it.

Again this puts Further Education Sector and apprenticeships centre stage in producing the qualified and informed workers of the future.

Some comments on competitiveness:

Britain is at present the fifth-largest economy but is tenth in competitiveness according to the World Economic Forum –  a figure that is continuing to decline.

Britain invests far less in training than its European counterpart and cuts back even further during recessions.

Poor quality management and leadership in manufacturing further weaken competitiveness and undermines any chance of improvement.

Manufacturing employs 2.6 million people representing approximating 8% of the workforce a figure that continues to decline. On average currently (2016) the workforce is declining by 20,000 people per quarter,

One depressing fact is the poor state of broadband coverage and the development of 4G  and 4G+ technologies in this country. The country broadcasts it is the 5th richest in the world but it is 54th on the broadband coverage and capacity. This seriously undermines its competitiveness and productivity. Couple this with the poor record of OECD skills in mathematics and science then the future for this country is dire. What makes this worse is the inability of the government and its departments to acknowledge and act on this woeful state.

Manufacturing contribution to the national economy was 41% in 1948 falling to 20% in 1997 and to 10% in 2016.

If the country is stupid enough to leave the EU the situation will be worse particularly in the area of skills gaps and shortages, investment, R&D investment etc.  Let’s hope sanity and realism reigns.

 

Productivity and competitiveness are very important contributing factors for  success in the global economy.

Evidence, both national and international shows that Britain does not have an effective strategy on manufacturing.

Poor working environments contribute to low competitive and productivity levels and research has shown a number of factors contribute to this element including ambient conditions such as work areas and there size, appearance and attractiveness, noise levels, temperature, humidity etc. Also the location of the work place is becoming a crucial factor e.g. the transport systems that the workers have to use to get to and from work and the hospitality facilities in the surrounding area to the work place.

Equally concerning is the continued decline by company’s investment in Research and Development (R&D) coupled with the government reducing the investment in science, engineering and technology. Investment in R&D and science/engineering and technology has declined since the early 2000s. This is a really depressing fact and will greatly weaken both the competitiveness and productivity levels in this country compared with our competitors in the global economies.

 

 

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