UK productivity remains low

Recently we heard the suggestion from a now very senior politician that the UK has low productivity because its people do not work hard enough. It may be correct to say that, on the generally accepted measure of productivity, the UK compares unfavourably with supposedly similar countries – but that does not necessarily mean it needs more ‘graft’, writes Prof Simon Bridge.

It is very convenient if progress towards an objective can be assessed by a simple measure. But the temptation then is to see that measure as a target and then Goodhart’s law applies: “When a measure becomes a target, it ceases to be a good measure”.

Is business productivity a case in point?

Have those in Northern Ireland trying to direct our economic development latched onto reports that our businesses have lower productivity than their competitors and therefore, if we would only raise our productivity, our economy would be stronger? And is the answer to low productivity really to get people to work harder?

If a pile of earth needs to be moved from one side of your garden path to the other do you just shovel it across the path – or do you put it into a wheelbarrow carry it all round the garden and then dump it just a few feet from where it started? The answer might seem obvious, but while the first may be more productive of your time, the second involves more graft.

For a while I worked in the shipyard and it provided some clear cases of hard work not being smart work. When ships were built out of wood and large gantry cranes were not available, shipwrights had to build the hull of a ship first before it could be launched and then handed over to the riggers to fit the masts and the rigging as they saw fit.

Those were the two main trades and, once they had finished, there was only minimal fitting out to be done. Also, because they had to work sequentially, they could work more or less independently.

But about fifty years ago, and following the example of Japan, the shipyard was redesigned for a different way of working, not least because, as well as welders to construct the steel hull, there were many other trades involved such as painters to paint it, electricians to do the wiring, plumbers to install all the necessary pipe work and carpenters and then decorators to fit out all the public spaces and cabins.

Further the system not only allowed but encouraged the construction of ‘weldments’: liftable bits of ship which could be constructed indoors, painted in the paint hall (now the film studios) and even had pipes and cables put in place before they were lifted by Sampson or Goliath into the dock to be welded together.

That should had reduced the labour needed to build a ship because it enabled much of the work to be done on smaller bits than the whole ship while they were still indoors and easier to access without the need for extensive scaffolding.

However that new work regime required not just new production facilities, which were forthcoming, but also a new approach to work organisation. To a large extent work was still allocated to each ‘trade’ which was then left to determine how it would do it and -co-operation between trades could be lacking.

For instance it did happen on at least one ship that, after the steel structure had been completed, the carpenters turned up to fit out cabins but found that the electricians and/or plumbers had not yet done their work. Nevertheless they proceeded as instructed and the decorative panels which the carpenters then put up had to be taken down again later to allow for the wiring and/or plumbing work and then replaced. (On one occasion the panels were memorably described by a manager as going up and down like ‘a whore’s drawers’.)

Because they would not then have fulfilled their work commitment, the system seemed unable to prevent the carpenters doing what their schedule required of them even if the work would obviously have to be repeated later – and the panels probably damaged in the process.

So in this everyone could have worked hard but sometimes very wastefully and in a way which did not add overall value. Therefore, while the carpenters’ work rate may have been high, overall productivity was low, and that was not the carpenters’ fault. Instead the problem arose because the leadership had failed to restructure work management, and the custom and practice that went with it – such as allowing each trade to plan its own work independently of others.

It had proved to be relatively easy to install new facilities but much harder to change the working system to maximise proper use to the new system and the productivity improvements that should have gone with it.

The implication of Correlli Barnett’s book Audit of War is that this was, in all probability, a hangover from wartime conditions when ships were so badly needed that shipbuilders were paid for their costs with a percentage on top for their profit.

That meant that the higher the costs the higher the profit and it was therefore profitable to employ labour even if it was used wastefully. And, he suggests, because the UK had won the war, people there thought they had done well and continued with the same mindset.

This example shows that raising productivity is not the same thing as just working harder. Also the figures we have for productivity are average figures based on the value (price) of the output per employee. Yet do we want all employees to increase the price received from their output? In theory that is done by the person concerned producing more output, for instance by working in a more efficient way and/or with more effective machines, but it can also be done by raising the prices of the output – and for some that is the only practical way to do it. These jobs are often in the service sector providing personal services.

For instance should authors write more books, even if those books are then of a lower quality, should a plumber fix more leaking radiators by working faster, or if an orchestra cannot perform more concerts in the same time, should it operate with fewer players?

So when we quote an average productivity figure to say we are low and should be higher, do we actually want to be higher? Are we comparing like for like between manufacturing where more can sometimes be produced for the same labour input, and services where sometimes a one-to-one personal service is crucial?

Also, in manufacturing, is the problem one which can be resolved by working harder or by working smarter – and where does the responsibility for smart working lie?

Therefore just calling for more graft as a response to apparently low productivity is to offer a simplistic solution to a complex problem – and, as such, is unlikely to work.

Reference:

Correlli Barnett, Audit of War, (London, Macmillan, 1986)