‘Damning indictment’

The government’s productivity plan has been slammed by a committee of MPs as “vague”, and not worth being called a plan at all.

 
The business, innovations and skills (BIS) committee noted in a report published today (February 1) that the “lack of specific and measurable policies [in the government’s productivity plan] means that there is a risk that the document is destined to collect dust on bookshelves across Whitehall.”

 
“Rather than being a clear and distinctive roadmap as to how Britain will close our productivity gap, [the plan] is a vague collection of existing policies,” noted BIS Committee chairman Iain Wright.

Lagging behind
The UK’s productivity, which measures output per worker, has remained notoriously low compared to other major industrialised countries such as Germany and the United States.

 
The government’s initial productivity plan – Fixing the Foundations – was published in July after chancellor George Osborne pledged to tackle the UK’s poor productivity performance. The productivity gap prompted business secretary Sajid Javid to call boosting productivity “the greatest economic challenge of our age”.

 
But why, exactly, is the UK so far behind on productivity?

 
Experts have pointed to businesses’ lack of investment in equipment and the government’s low public infrastructure spending as main drivers of the UK’s stubbornly low productivity.

 
Unite assistant general secretary Tony Burke added that a skills crisis driven by lack of quality apprenticeships, as well as a failure to integrate the workforce and their representative unions in company decision making, are also keeping productivity low.

 
Burke called today’s BIS committee report a “damning indictment” of the government’s track record on productivity.

 
“As the report rightly pointed out, the government’s so-called productivity plan is not a plan at all. It’s just more of the sloganeering without substance that we’ve come to know from this government – ‘march of the makers’ and the ‘northern Powerhouse’ come to mind.”

Quality apprenticeships
The BIS committee noted that there is a severe lack of clarity around the apprenticeship levy, which is scheduled to come into force in April of next year, and will fund 3m apprenticeships.

 
“It appears that the government has not consulted with, or considered the impact that this policy will have on industry,” the report noted. “Three million apprentices is a significant commitment to place on businesses and we are concerned that this is a decision that has been made with no consideration for what type of training businesses actually want to facilitate.”

 
Burke argued also that the government’s pledge to rapidly expand apprenticeships may come at the cost of quality training.

 
“The government has said these apprenticeships will be at minimum 12 months long, but at least in manufacturing, this is nowhere near long enough,” he explained. “We at Unite have been calling for gold standard apprenticeships that are at least three years long.”

 
Figures from the Office of National Statistics released in September of last year showed just how far the UK was lagging behind the world’s major economies.

 
Of the countries in the G7, which includes Canada, the UK, Japan, France Germany, Italy and the United States, only one country, Japan, fared worse than the UK in 2014. The UK lagged behind Germany, France and the United States in output per worker by between 32 and 33 percentage points.

 
Unite last year investigated the productivity gap between the UK and other advanced economies, specifically Germany, the United States and France.

Stronger trade unions, better training

Lack of investment was highlighted in Unite’s research as being a main roadblock to increasing productivity in the UK.

 
“One of the biggest problems facing the UK is that lending and investment still have not even come close to their pre-crisis rates and this has forced some companies, especially SMEs, to hire cheap labour instead of buying new machines that would make them more productive,” the Unite report noted.

 
A major difference between the UK and France which could explain France’s higher productivity is the role that trade unions and workers play in company decision-making.

 
The Unite report explained that French law “provides for elected union delegates representing all employees, whether they are union members or not, in firms with over 50 staff on works councils and separate health and safety councils. These must be consulted regularly by employers on a wide range of different managerial decisions.”

 
Germany’s higher productivity can in part be attributed to its highly skilled workforce, which has been achieved through its dual vocational education system.

 
In this system, trainees are apprenticed to a company and work 3 to 4 days a week alongside industry professionals and spend 1 to 2 days a week attending a state supported vocational school taking courses relevant to their chosen vocation.

 
Germany, too, has tuition free universities, which puts the country at a competitive disadvantage to the UK, where in many cases students must take on significant debts in order to study.

Time for action
“We need to be looking at exactly why other nations are outperforming us on productivity, instead of offering up reports that are nothing more than press releases,” Burke added.

 
“There are specific steps the government can take to solve the productivity puzzle,” he explained. “We at Unite have called for greater investment in advanced manufacturing technologies, supporting a serious skills and education agenda that helps businesses upskill their employees, as well creating strong structures for union and management co-operation.”

 
“Now is the time for action,” Burke went on to say. “It is our hope that the BIS committee has opened up the government’s eyes to the enormous – but eminently doable – tasks in front of us to achieve a more productive and prosperous economy.”

 
Find out more about Unite’s recommendations to improve productivity here.