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High levels of employment in the UK and tightening of immigration laws is already transforming the labour market and the employment landscape. Economists are predicting that the slack in the labour market which has seen plentiful skills in some, but not all, areas is about to end.  This may well lead to wage inflation and increased costs as the laws of supply and demand dictate that rising labour costs will soon erode margins.  The productivity problem is a growing concern.

Productivity is low and employment is high as organisations shun investment and take people on instead. The ‘low skills equilibrium’ where people are poorly paid with resulting low productivity cannot continue given a shrinking labour pool the UK will increasingly find itself with.

Productivity must be addressed by business

At The Occupational Psychology Group (The OPG), we regularly work with clients who invest little or no resources in culture, learning & development and in some cases good human resources practices. They often ask us to help when the crunch hits.  Be it to solve performance issues such as failing operational performance or weakness in the leadership team and all the well documented problems this can cause.  Indeed, research from The Institute of Employment Studies has found a link between poor management and low productivity.

The fact is we are behind many of our global rivals because of relatively poor people practices. These have impacted performance negatively as surveys show and are costing businesses in terms of lost revenue and human aspiration. Moreover, a correlation between innovation and good management rings alarm bells for innovation in the UK.  For example, we have worked with or spoken with numerous organisations suffering major issues such as inventory concerns, waste problems and so on.  In our experience there is just one common denominator, people!  Be it a lack of motivation, preparedness to act or de-motivated and disengaged individuals, team working is likely not to exist, in these environments.

Forward thinking organisations are now awakening to having good HR and learning & development practices in place. This has encouraged self-awareness amongst employees and a desire to improve for themselves and others. This in turn positively impacts employee engagement, innovative practices and ultimately, productivity and performance.

Solutions need not cost the earth. Good workforce planning and tight controls on vendors of learning & development services will help make future proofing the skills and motivation of your team viable.

Do not think low pay and low productivity can be sustained. Eventually, the lure of the low-cost economy overseas will prevail for many organisations unless we build resilience and a skills differentiation into UK business. Government can only do so much, all of us in corporate life needs to do our bit!

Matthew Davis is the practice Director of The Occupational Psychology Group & Ramsey Hall Talent Management. He can be contacted via The OPG www.theopg.co.uk or on 02380 236944.

Is productivity a problem

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