George Osborne Demands Increased Productivity


George Osborne Budget


George Osborne has unveiled his budget today with one of his key initiatives being an increase in productivity for UK businesses.

Great Britain has a woeful record on productivity with statistics showing UK workers producing a lot less per hour than workers in many other industrialised economies. This doesn’t bode well as economic growth is heavily determined by productivity, even more so when we have a stable and/or ageing workforce.

But economists have been scratching their heads as the link between economic growth and productivity appears to be somewhat broken. The UK economy has performed relatively well compared to many other industrialised countries whilst our productivity growth has been lower.

No-one quite understands what’s going on. Some say it’s because the way we measure productivity is either wrong or incomplete whilst other point to the structure of the UK economy which is more heavily biased towards services.

In the UK, we have a lot more electricians, plumbers, hairdressers and consultants than say Germany which is more heavily skewed towards manufacturing.

Productivity in the Service Sector

Unfortunately, it is often more difficult to increase productivity in the service sector. Unlike in manufacturing organisations where you can buy the latest machine for your production line and watch the output per worker increase, in the service sector it is not as easy for a hairdresser to increase the number of haircuts s(he) provides, no matter how sharp her scissors.

George Osborne, the British chancellor promised to unveil a plan designed to “make Britain work better” in his Budget on 8 July. But what can really be done.

We have conducted research with a lot of our customers who work in the service sector. They range from electricians and plumbers through to security companies. The conclusions we drew was that productivity can be increased substantially, even in these industries.

In many of these industries there is still a heavy reliance on paper for job sheets, work sheets or delivery notes. Filling out these paper forms is very inefficient and time-consuming with paperwork alone often taking up at least a couple of hours for each engineer and even more for the boss of the company.

With the average time spent on a job being around an hour, spending 2 hours on paperwork means 2 jobs lost which not only costs the company money, it ultimately affects the UK’s productivity statistics.

A heavy reliance on paper often results in engineers having to come to the office to pick up their jobs each day and then bring their job sheets back at the end of the day or week. Again this means time wasted when an engineer could be working and higher costs for items such as fuel.

Using paper job sheets often also leads to missing invoices or disputes when an invoice is simply forgotten or the customer queries the amount on the invoice. This takes up time which could be better served in growing the company and leads to lost work and lost productivity.


But what can be done?

“There are jobs that organisations are unable to automate,” says Prof Peter Fleming at Cass Business School of City University London. Jobs like flipping burgers and driving buses which though necessary are low skilled and low paid and don’t add much to the overall economic output.

But Prof Fleming also sees other factors at play. He says Britain’s workforce has been “neglected in terms of pay and conditions.”

Wages have stagnated for the past few decades and an increasing number of people are working on “zero hour contracts” where staff is hired with no guarantee of work and uncertain pay. Prof Fleming argues that this has demoralised the workforce, depriving them of incentives to work better or harder.

But there is hope. Technology is having a huge impact on the way many people work and the impact is starting to be felt in the construction, electrical contracting and plumbing sectors.

Cloud based software means that information can be shared more easily and be instantly accessible wherever your workers are. The latest job management software in particular can eradicate paper based job sheets, sending information to the engineers mobile telephone and updating the office as soon as the job is complete.

This leads to less administration, fewer mistakes and higher productivity.

When it comes to productivity, making sure your staff have the right training is also key, says Pizza Express boss Richard Hodgson “It’s a very difficult time to be an average worker,” he says. In the UK “we have seen the proliferation of any type of work – work that doesn’t add anything to the economy – just to get people off the unemployment list.”


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