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THE UK CAN LEARN PRODUCTIVITY LESSONS FROM SINGAPORE


In February 2016, the Office for National Statistics released its latest data on the UK’s productivity record relative to the other leading G7 group of economies including Germany, USA and France.

It showed that the gap in productivity, measured by the output per hour worked, had actually grown to its worst level since 1990. In fact, productivity is now 18% below the average for the remaining six members of the G7 group of industrial nations in 2014, with only Japan having a worst productivity record than the UK.

As a result, the UK is now 36% behind Germany and 30% behind the USA in terms of our productivity, and this gap is continuing to grow.

The UK Government has rightly recognised that one of the key challenges over the course of the next Parliament is to reverse this long-term productivity problem that many believe is holding back a growing economy.

To date, its approach to this has been the publication of a broad plan that involves encouraging long-term investment and promoting a
dynamic economy.

The document, Fixing the Foundations: Creating a more prosperous nation, includes measures for investing in the economy, developing a highly skilled workforce, building a modern infrastructure and encouraging greater openness and competition.

Whilst this is all laudable, my main criticism is that it remains a collection of vague policies and I am slightly surprised that, given this is clearly the big economic challenge of our times, there is no national imperative to drive forward productivity across the UK – and more importantly to encourage businesses to take this challenge more seriously.

This is very different to what has been happening in one of the most competitive economies in the world.

The Singapore government has established a National Productivity Council to take forward this critical agenda. Comprising representatives from the private and public sector as well as trade unions, it aims to support capabilities and programmes across all industrial sectors and achieve national productivity growth of 2-3% per annum to boost economic growth.

Some of the programmes they have developed should certainly be considered here in the UK, given that there are no firm-specific incentives to help businesses improve their productivity.

For example, the SME-PRO programme ensured that all small to medium-sized enterprises (SMEs) in Singapore took steps to improve productivity growth by increasing awareness, providing specific training and taking action.

There is also the iSPRINT programme that, since 2010, has provided support to SMEs to take up new technologies to boost productivity and growth. This programme not only promotes the adoption of ICT-based solutions that have been proven to help SMEs raise productivity, but also encourages businesses to pilot emerging technology solutions that can transform their businesses eg by adopting innovations in areas such as sensors, data analytics and robotics.

Finally, there is the Inclusive Growth Programme (IMG) which is not only about improving business operations but, more importantly, helps workers to acquire new skills, upgrade skills and be multi-skilled.

In fact, this programme insists that any productivity gains must be shared with employees, and whilst the programme cannot be used to pay for direct wages, it can provide higher wages and performance incentives within those businesses that become more productive as a result of this intervention.

But most important of all is the outreach campaign, Way to Go Singapore, to encourage greater productivity in the Singapore economy.

This emphasises that this a national imperative that should involve everyone – employers, workers and the public – to deliver sustainable growth and improve competitiveness.

Given the importance of encouraging greater productivity here, it is disappointing that there is nothing similar within the UK, especially given that business groups such as the Institute of Directors (IoD) and the CBI are supportive of such measures.

In fact, whilst productivity seems to be the biggest challenge facing the UK economy going forward, it is disappointing that, unlike Singapore, there is no specific approach to improving productivity at a firm level anywhere in the country.

With Wales remaining the poorest part of the United Kingdom, this may well be something that the Welsh political parties may consider as part of their manifestos for the next Assembly election.

Improving the productivity of the nation may not be the most eye-catching slogan on a political pamphlet but it is certainly a policy that can have considerable long-term benefits for the business community in the future.

Certainly, if Wales can emulate another small nation such as Singapore and develop specific interventions that can improve its productivity at a faster rate than other parts of the UK, it could begin to finally close the wealth gap that is holding back our economy.

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