Although the economy grew more than expected last year, productivity (the amount of work an employee produces) is in fact decreasing and remains below where it was before the financial crisis. The Office of National Statistics (ONS) said this marks an unprecedented absence of growth since World War 2!
“Generally people are paid in line with what they produce each year proportionality, which used to grow at something like 2% a year. Since 2007 it’s been going up or down a little bit but is broadly flat, that explains why although the economy is growing an employee’s pay packet hasn’t been. “
So why has this been? Dr Philpot goes on to explain “What essentially drives our productivity is how much technology we have, how skilled we are and over the years since the crash employers haven’t been investing in technology and they haven’t been investing in skills. This has meant that even though the economy has been expanding we have just been relying on hiring more people rather than making people more productive each hour in their job, if they are not becoming more productive then they are not going to be paid more.”
When asked if things are changing he responded “At the moment we are back to where we were in 2007 so things should pick up. As unemployment falls that will start to raise costs for employers which may well spur them on to invest in skills rather than simply hiring more people. “
How do we compare to others in the world? “We are lagging behind, the US are way out in front and we are way behind the Germans and French who are traditionally good at investing in equipment and skills respectfully. We haven’t been very good at investing in either of those areas so we have lagged behind and we have got even worse during the 2007 crisis. If we going to be considered an international powerhouse we have to do something about this productivity problem rather than congratulating ourselves that the economy is growing and we are employing more people. “
Strong words but what can be done? Firstly, by investing in the employees you already have and by giving them training and then keeping track of that improved skill set, in Mitrefinch’s software we have a skills matric which means you can keep track of who has been trained to what level and make sure the correct staff are in the correct locations at the correct time to drive productivity forward in your company.
Secondly by investing in your HR department you can invest in a comprehensive HR software suite. Getting rid of paper based or basic excel systems and speeding up the basic process such as clocking in and out, payroll and holidays will free up time for HR department to tackle the more complex issues they may face day to day. From Time and Attendance to Rostering and Payroll see what Mitrefinch can do to increase your productivity and your company’s productivity.