The true challenge is in spreading improvements more widelyby Prospect Team / May 2, 2018 / Leave a comment
Leaders from across politics, business and trade unions will today put their heads together at a major summit to tackle one of the UK’s most intractable problems: improving productivity—the amount workers produce per hour—particularly in the retail and hospitality sectors. While the Beast from the East may have provided a week-long chill to the nation’s economic output, more fundamental challenges than snow are hampering UK businesses and workers.
Poor productivity is holding back improvements in wage growth and living standards. This is bad for both firms and workers: businesses are unable to improve their performance at a time when they need to be match fit for Brexit, while more families struggle to make ends meet. Despite record employment and a recent uplift in wage growth due to falling inflation, productivity still holds the key to improving living standards across the country. Yet we appear no closer to solving the productivity puzzle. That’s why we need to look again at not just how we improve productivity across the economy, but where.
Whatever the outcome of the Brexit negotiations, there are swathes of our country that have failed to see any significant recovery following the financial crash. If the government wants to fulfil its ambition to create an economy that works for everyone, we need to drive up pay and performance in sectors that often aren’t seen as glamourous or high-tech but are really important to people and our wider economy. One in four private sector jobs are in the retail and hospitality sectors (3m in retail, 2.3m in hospitality, per latest ONS data). Just under half (46 per cent) of workers in retail and around three in five workers in hospitality are on low pay. As analysis for JRF shows, across all low-paying sectors, German, French and Dutch workers produce more in four days than we produce in five.