Britain's Productivity Woes Lie In Its Habitually Inefficient Management

Economic woes, largely originating in our productivity problem, underscore much British political discourse today. The productivity problem boils down to the notion that the amount of additional value generated per average UK work hour underwhelms compared to our economic peers and superiors, like France, Germany, the USA, and perhaps soon Poland. 

The UK has recently seen record work absence due to sickness, is consistently low on comparative worker engagement scores, and exhibits poor economic confidence indicators. These do not paint a complete picture, but this is territory that many political figures and commentators are willing to make into a battleground; the UK economy needs to be made more productive, its businesses and industries need to be able to get more – quality and quantity – out of their workers.

There are a handful of responses, from bearing down more on workers’ rights and industrial action to reducing the minimum wage, which remain largely in opposition for now, thanks to the new wide-ranging Employment Rights Act. But some retain what is judged to be an ideological attraction to such blunt measures which do little to address questions of efficiency, effort, and motivation at the heart of business and working life in the UK today.

On these pertinent questions, however, political veteran Vince Cable argued in an article some years ago that, with an ageing population, “the decline in the share of the working-age population will reduce the productive capacity of the economy.” These pressures, he argued “could be eased if younger, fitter, people of retirement age were to continue working”.

And today, at the other end of the spectrum, cultural mismatches between working life and young Gen-Z entrants into the workplace appears to have quickly disillusioned them. In many ways, this gets at the same (unanswered) question as Cable was pondering – how can work and business life in the UK be made more appealing, to more people, for more of their lives? 

Could part of the issue lie in the professional culture of the UK, in which many workers are saddled with ineffective management that saps morale and alienates professionals, undervaluing their pride in their work while overvaluing superficial issues of corporate presentation? Where might the UK economy see improvements? What changes or innovations could make a difference to productivity?

The four-day working week is an idea with some traction. Having had many successful – though not necessarily large-scale – trials, the idea’s proponents suggest it increases worker satisfaction and efficiency leading to greater productivity, unlocks more consumer spending, and provides a way of expanding the labour market to some of those who might currently find it inaccessible. 

But PM Starmer ruled out the four-day week for government employees in 2024, and in the government’s latest intervention, Steve Reed, current secretary for Local Government, issued a warning to local authorities last week that adopting a four-day working week would be interpreted as an indicator of ‘potential failure’. This missive, justified by vague non-sequiturs about “high standards and hard work,” is not an encouraging sign for the four-day week’s proponents, then. 

To consider another example, in industries delivering services that are of critical importance to the public, strikes tend to be an ineffective tool for resolving industrial disputes as they damage the wider public and the workers who are most dedicated to their profession, as much as their employers. But the previous government’s blunt solution – minimum service level mandates (and thus effective strike prohibitions) in core economic sectors under the Strike Act 2023 – was repealed in short order by the current government, who understood that it gave employers “an unfair advantage in the negotiation of workers terms and conditions.” 

But this still leaves the question of what to do to ensure workable industrial relations in these critical areas of the economy, that are typically non-production line and service- and information-heavy. Could a co-determination model of industrial relations mitigate the issues in these contexts? Co-determination is where restrictions on strike action are strict, but the state enacts and enforces laws that require an accountable workers’ representative to have a seat on the executive board – alongside other mechanisms of corporate transparency and accountability to workers. However, though co-determination has attracted much academic interest as a solution to corporate and bureaucratic abuses, its empirical over-reliance on Germany leaves its implementation in Britain somewhat of a long shot.

Or to consider another issue, many large employers waste eyewatering amounts outsourcing to consultants and service firms. The price paid is not just written on invoices and measured on balance sheets, as it costs the morale and productivity of workers who feel mistrusted or sidelined in their vocation, sees substantial sums of money diverted away from necessary system or equipment upgrades or better pay incentives, and often precipitates extra energies being spent covering up for the inadequacies, inexperience, and ignorance of outside contractors and consultants. This is an especially big problem in the public sector, which shows no signs of abating, but it desperately needs addressing throughout the UK economy.  

Those seeking to improve the UK’s economic productivity, then, need to be imaginative across a whole spectrum of initiatives centred around work and business culture. Without innovations that improve the motivations of more people to be in work for more of their lives, economic progress may remain illusory and the UK is likely to continue lagging behind its peer economies in its bid for the sunlit uplands.

Image: Wikimedia Commons/HM Treasury

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