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Second to bottom in G7- why is UK productivity in trouble?

Is there a correlation between UK plc’s woeful productivity levels and poor workplace training?

In January 2023, the Office of National Statistics (ONS) reversed an earlier announcement on productivity data. Rather than having the fastest rise in output per hour (with the exception of Japan) in 2020-21, the revised numbers showed that Britain had fallen to second bottom of the G7 league table on this measure. Only France had worse numbers.”

It got me thinking and reading and looking for answers. One conclusion was that workplace training undoubtedly had a role to play in “Broken Britain” languishing almost bottom of the G7 productivity league table. This isn’t a dig at the L&D practitioners of the UK, rather a criticism of the short-sighted management practices of much of UK plc and a meddling government that is out of touch and out of their depth.

True, these figures reflect a period of time when the UK (and much of the rest of the world) was in lockdown and the popular press was full of articles crowing about working from home being so much more efficient. One could perhaps argue the jury is still out regarding relative productivity of WFH vs WFO, but for the purposes of this article, I am assuming the rest of the G7 faced similar operational challenges as to make this a constant, and not a differentiator.

So back to my hypothesis that there is a very strong correlation between UK plc’s woeful productivity levels and poor workplace training.

Back in December 2022, I read an article in The Sunday Times entitled, “Why are we so bad at training the future workforce” [1]. It was interesting; I kept it and over the holiday period I gave it some thought. The essence of the article was that compared with, for example, the rest of Europe, the UK invests considerably less in workplace and technical training. It also quotes that Britain’s average investment in employee training has dropped 28% since 2005.

The unsaid conclusion was that we (the UK) are just a bit rubbish when it comes to training our workforce. And train the workforce is what we must do if we are to have the skilled resources companies need to grow and compete in a global economy and reverse this steady decline in productivity. This conclusion isn’t my own but is sure to ruffle some feathers in the L&D community. In their defence, L&D can only work within the budgets they have and, if budgets are being relatively cut, then inevitably the outcomes will suffer.

But is it as simple as just investing more money in L&D at a local level or is the solution deeper and more complicated and shouldn’t the government be doing more to solve the productivity problem and help UK firms to compete on the global stage?

Let’s start with the role of the government. Government attempts to intervene in business rarely (IMO) work, and the government should stick to governing and leave businesspeople to run businesses. A classic example being the Apprentice Levy. This hasn’t worked and many firms who pay the levy just treat it as an additional, (not so) stealth tax and otherwise ignore it. It isn’t fit for purpose and doesn’t deliver employment-ready, skilled and productive employees into the workplace. That’s primarily because it’s a tax and not an incentive and because (unqualified) government in their wisdom has made the decision on behalf of business. It speaks volumes to the prevailing attitude of government today compared with those of the past.

Compare the initiatives used by the conservative government in the 1980s when trying to encourage investment in UK business and get Britain back on its feet. Employers were given great tax incentives to go out and buy assets that they could use to generate revenue and create employment. As a businessperson, it was free money and tens of thousands of firms took advantage and businesspeople decided what they would invest in and how – not government. What followed was a near record period of quarter-on-quarter growth of the UK economy.

What is required is for the UK government to provide incentives for UK businesses to invest as they see fit in the development of their employees. Government needs to create a level playing field and invest in the UK workforce upskilling. Businesses know best what is required for their business. Give them the resources so businesses can help themselves and business will solve the ever-deepening talent and productivity problem. But right now, there is no positive incentive from government to address this skills gap, and employers and L&D practitioners are being left to fend and fund for themselves.

One observation made in the Sunday Times article is that UK firms do not invest in training because the employee might leave when they have been trained! I am sure that this is (to some extent) grounded in truth, but employers need to grasp this nettle and ensure the holistic employment offering is sufficiently compelling for employees to stay, even after they have been upskilled.

Employee development (or rather lack of) variously appears in the top five reasons in numerous surveys into why employees leave their employer. Somewhat ironic, given one of the primary reasons (according to TST) for not investing in employees is the fear they will leave. According to Forbes, employees positively discriminate against employers who do not develop their capabilities [2]. Basically, if you don’t properly train and develop them, they will leave anyway!

It may be coincidental, but as investment in employee workplace training has fallen, so too has workforce productivity. Yes, the government can certainly do more and provide genuine incentives as opposed to layer on additional tax, but employers need to urgently up their game and properly invest in workplace training and development. Here, L&D does have a role to play.

To me, it feels like L&D is caught in a race to the bottom, sponsored by the accountants looking to reduce the relative cost of training provision because training is a cost and not an investment. I believe most employers have lost sight of the purpose of employee workplace training. It isn’t a cost to be managed down, it is an investment in future growth. Or at least it should be.

Perhaps L&D must shoulder some responsibility. If L&D practitioners were more adept at correlating investment in training and positive impact on the business bottom line, then all things being equal, accountants being accountants will invest more.

“Return on Investment” has been the subject of many a webinar and article for many years, but I have still to see a single business with an L&D Director at the top table. Not HR but Learning & Development. If employers valued L&D and saw a corelation between investments in people development (workplace training) and economic performance improvement of the enterprise, you can bet that every employer would have an L&D practitioner at the top table. Afterall, in many instances the payroll is one of single biggest line items of cost on the P&L.

Too many L&D practitioners have been shaped by two decades of falling investment and (IMO) a trade body who deals in an insular lexicon, entirely irrelevant to business leaders in a tech savvy 2023. The future of L&D has potentially never been so exciting and for those practitioners who are prepared to step out of their comfort zone and start addressing problems like employee workplace productivity, the opportunities are amazing.

So, in conclusion, it’s a bit “chicken and egg”. Employers won’t invest in workplace training because they have become conditioned to know it doesn’t move the performance dial. This of course has proven to be true. Despite this fact, employers are wrong if they believe there is no role for L&D in improving employee in-role performance and productivity. Many L&D practitioners would love to be part of the solution and not treated as a cost to be managed down. It takes courage and it takes determination, but like most things worth having in life, there is an element of hard work and risk.

But just how do we achieve this transition from cost to be managed (down) to a business-critical function that adds value and increases growth and profitability? Like most people, perhaps even more so, accountants and business leaders want to see proof before they invest. So, the answer probably lies in proving the point on a small scale to access increased investment and change perceptions over time with evidence of improved in-role performance and productivity. Show them it is possible; prove that L&D is part of the solution and not part of the problem and get yourself a seat at the top table.

Hey and you never know, at some point the government might wake up to the idea that the Apprentice Levy is – for the greater part – a waste of time and set an exciting incentive in place for firms who invest in the genuine and authentic development of workplace skills such that UK plc can fix the widening productivity gap between us and the rest of the G7.




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