Data out today shows that most important of all economic indicators has fallen very sharply indeed.
According to Nobel-winning economist, Paul Krugman, productivity isn't everything, but it is almost everything. Well, if that is right, almost everything declined by 0.5 per cent in Q1.
According to the ONS, production output grew by 0.3 per cent in Q1. Output per hour, however, (the main measure of labour productivity) has fallen by 0.5 per cent between January and March 2017. This is a result of hours worked growing faster than output, especially across the distribution, transport, storage, communications, and hospitality sectors.
Despite there being 381,000 more people aged 16 and over in work year-on-year, productivity has taken a dip.
Presumably, output per hour in the transport sector will shoot up once we move over to autonomous vehicles.
What can we do about this?
Maybe part of the problem is cheap labour, employers don't need to worry so much about increasing productivity via investment if labour is so cheap. See The problem of technology and inequality.
Telecommunications company, ShoteTel, has been asking itself this very question; and has been focusing on communication. It says "Changes in the workplace, from employees in the gig economy through to the flexible and remote working practices can increase output pressures on businesses. Many managers still find themselves uncomfortable overseeing such arrangements. Their main concern: will productivity drop once an employee is set up outside the office?
In ShoreTel’s survey of 750 British businesses of between 50 to 500 employees this year, found that organisations of all sizes agree (65 per cent) that increased competitive pressures make effective communications critical to increasing productivity. Unfortunately, over half (51 per cent) said their current communications systems are unable to support how staff work flexibly and this is impacting productivity.
ShoreTel VP & MD EMEA, Adrian Hipkiss says, “The flexibility of cloud-based unified communications empowers people and teams to be more productive, no matter their location. All this is particularly true of millennials who, according to PwC, will make up 50 per cent of the global workforce by 2020. For Millennials, technology is second-nature, and this has shaped their behaviours and expectations. If businesses want to reap greater productivity benefits from their employees, it’s important to have the tools necessary to support changes in working practices.”