The dire consequence of low productivity growth | Issue #23
In this week's Bulletin, we look at the consequences of poor productivity growth on wages, what work-from-home might look like this winter and more.
Welcome to the latest edition of The Leadership Bulletin.
This time next week, we will know who the UK’s next Prime Minister will be. Like almost every leader across the country (and the world), they have an unenviable inbox.
As ever, I hope that the Bulletin and its recommendations can play a small role in helping you, as a leader and manager, navigate your way through the present challenges.
Let’s dive in.
RETHINKING WORK-FROM-HOME THIS WINTER.
With soaring energy bills and more people working from home, I’m beginning to wonder: who will pay to heat home offices this winter? It would be perfectly understandable for staff who work from home to want to return to a heated office rather than pay to heat their homes all day. Could this reverse the recent trend towards working from home? If you’re an employer who doesn't make an office available to your staff, I think it's important to consider now how you will help them meet the higher costs of working from home. That could mean a monthly grant towards home costs, support in buying goods to make their home more energy efficient (e.g. LED lightbulbs) or making an office space available, perhaps even in a local co-working space.
IN FOCUS: THE CONSEQUENCES OF LOW PRODUCTIVITY GROWTH.
If you’re a regular reader of this Bulletin, or you follow me on social media, you will know that I post about productivity a lot. It’s a pretty abstract concept for most people. After all, whilst we can all probably explain what it is - output per input, e.g. value produced per hour worked - it’s harder to really visualise what that looks like. Well, a report from the TUC recently laid bare one of the most striking consequences of low productivity growth and one we can all envisage: wages.
Since the financial crisis, UK productivity growth has stalled. You can see that on this chart, below, from the BBC.
And here is the chart from the TUC that shows a remarkably similar pattern for UK wage growth.
In both cases, the financial crisis of 2007-8 marked a rupture in the long-term trend of growth. Years of productivity growth came to an abrupt halt and, with it, wage growth.
That’s the problem. So what’s the solution? It’s a complex question, but here are three of the things that I think are most important.
More skills. Ultimately, more skilful workers are more productive workers. We need to make sure organisations are upskilling their staff with the skills they need to be more successful and advance in their careers.
More technology. At its core, productivity is output per input, so boosting it means doing more with what you already have. Technology and its adoption, especially where it can streamline your processes, it an invaluable way of achieving this.
More infrastructure and better connectivity. To be a productive business, you need access to people. That’s one of the reasons why I think superfast broadband and regular trains and buses are an important part of solving the productivity challenge, especially outside of London and the South East.
Boosting productivity should be a great national mission for the UK. If we don’t find a way to do it, wage growth will continue to stall and we simply won’t be as prosperous a nation as we should be.
IN FOCUS BACK CATALOGUE.
Did you know that after every Leadership Bulletin I upload the latest In Focus to the Edfolio website? You can discover our back catalogue and the latest news from Edfolio by clicking here.
CMI’S MANAGEMENT BOOK OF THE YEAR SHORTLIST.
Diverse perspectives on interesting topics - and, of course, well-written. That's what I look for in business books and it's why I so often fill my Summer reading list with the shortlist for CMI's Management Book of the Year. I'm working my way through their selections now and, once again, they have picked a fascinating selection of books. This year's shortlist is:
World Class by Will Greenwood and Ben Fennell
You can find out more about these books, and the longlists they were chosen from, by clicking here.