If more people in work does not equal increased productivity, this means that there are other long-term factors underpinning the UK’s productivity problem. Friday’s figures released by the ONS once again show that the UK still struggles to find the missing pieces to solve its productivity puzzle. If we continue on this path, the UK economic slowdown in the next few years risks being worse than in any other comparable large advanced economy.
Despite a record employment rate and strong wage growth, we have a poor record in boosting productivity – in fact according to the ONS, it has been lower over the past decade than at any time in the 20th century and lags well behind other members of the G7. Trying to improve our country’s productivity is a great challenge, which is made even tougher by Brexit uncertainty.
To compete on the global stage and raise our productivity game, we need to embrace and invest in digital transformation but this is just the tip of the iceberg. Having a well-trained, tech-savvy workforce able to leverage new and emerging technologies will make or break our success.
Worryingly evidence suggests that we are still a long way off of reaching our target. In a recent report by the British Chamber of Commerce and Totaljobs 75% of companies in the UK reported a shortage of suitable candidates to fill in their vacancies. In addition a 2017 CIPD report revealed that UK companies generally spend less on training than other major EU economies and our own 2018 Mind the Skills Gap research highlighted that one in four UK workers was not participating in any in-work training.
To make the most of the digital opportunity, we have to tackle the skills issue from the demand side (employers), the supply side (employees) and through enhanced government policy.
We need to encourage employees to overcome their complacency and develop a mindset to skill and reskill throughout their careers, whether that’s through continuing professional development, gaining further academic qualifications or undertaking an apprenticeship.
All businesses need to take an agile approach that supports ongoing reskilling and reinvestment in their workforce. This includes reviewing their organisational structure to identify future needs, finding new ways of retaining and sourcing talent, and continuously training employees to enhance their capabilities through the empowered use of technology.
We will also need to review our national education and skills policies, in particular the Apprenticeship Levy as it currently stands to expand it to provide for reskilling and lifelong learning. We need to shift the focus to delivering sustainable careers.
Getting the formula right will be crucial if the UK is to create a highly skilled workforce that is agile, competent and tech savvy enough to solve its productivity puzzle and deliver growth.