As the UK grapples with stagnant productivity growth, a new report from The Open University has found that one in four businesses (27 per cent) believe productivity has declined over the past five years, reflecting broader concerns ahead of the upcoming Budget.
The report, based on a YouGov survey of over 500 UK businesses, uncovers a disconnect in how organisations address productivity. Alarmingly, nearly a third (29 per cent) of organisations do not measure productivity, despite three-quarters (75 per cent) identifying it as a priority. This gap leaves many companies ill-equipped to identify areas for improvement.
With UK productivity lagging behind countries like the US, Germany, and France – projected to be 0.1 per cent lower in 2024 than in 2023 – the report examines how organisations prioritise, measure, and strive to enhance productivity.
Two in five (41 per cent) of UK decision makers agree the ongoing skills shortage is having a negative impact on the productivity of their organisation. Amongst the biggest barriers hindering productivity improvements are:
- Lack of budgets (28 per cent)
- Lack of relevant technical skills (24 per cent)
- Outdated systems of technology (24 per cent)
- Lack of leadership and management skills (21 per cent)
- Mental health and wellbeing challenges (20 per cent)
Interestingly, while 27 per cent of respondents offer hybrid and flexible remote working arrangements to boost productivity, only 15 per cent view these as obstacles to improvement. In response to these challenges, employers are encouraged to invest in upskilling initiatives and prioritise employee wellbeing and explore new technologies.
Despite an increased focus on equality, diversity, and inclusion (EDI), only one-third (30 per cent) of organisations are leveraging EDI as a strategy for enhancing productivity. This missed opportunity may prevent businesses from maximising their current workforce’s potential and expanding and enabling and diversifying their talent pool from members of local communities who may have previously faced barriers to work and training.
A significant disparity exists between large enterprises and small to medium-sized enterprises (SMEs): 75 per cent of large businesses have implemented programmes or initiatives to enhance productivity, compared to just 37 per cent of SMEs. This highlights that some productivity issues are more acute with SMEs who lack time and expertise to put interventions in place.
Some organisations are optimistic about their productivity levels, with nearly half (49 per cent) rejecting the notion that it has worsened over the past five years. This highlights how some organisations are embracing solutions to productivity, but this isn’t reflected across UK organisations as a whole.
“Low productivity has become the Achilles’ heel of the UK economy for the last decade and a half,” says Viren Patel, Director of Employers and Partnerships and CEO of OU Worldwide at The Open University. “This report underscores that addressing the ‘productivity puzzle’ is crucial for most organisations. With growth high on the new UK Government’s agenda, identifying barriers to productivity and establishing measurement systems are essential first steps.
“Increasing productivity isn’t about working employees harder for longer or recruiting more staff, it is embedded in employee wellbeing, development of skills, technology and equality, diversity and inclusion,” Patel added. “Improved productivity will not only benefit businesses and the wider economy, but also work towards improving employees’ experiences.”
