Productivity in the UK is poor. In fact, the output per hour in the UK lagged behind almost all of the other G7 members, with the exception of Japan.
But against the total G7 average, the UK lags behind by 18 percentage points in terms of output per working in 2015, according to new government figures.
Efforts to boost the country’s output have so far failed to untangle this ‘productivity puzzle’.
One solution to this is for the UK to become more entrepreneurial, as the determined work ethic ensures start-ups and scale-ups are highly productive.
Another solution is investment, in particular, investment in apprenticeships. The upcoming apprenticeship levy has been a flagship part of the government’s plan to increase productivity since July 2015, but its implications are still being unpacked by UK businesses.
Steve Hill, External Engagement Director at The Open University, said investment in skills can produce productivity growth, but argues that getting the most out the upcoming apprenticeship levy means tailoring programmes to address businesses' skills needs.
As of April 2017, businesses with a pay bill of more than £3 million will have to pay the levy to help fund apprenticeships in the UK. The levy aims to combat the criticism of apprenticeship schemes for not providing businesses with the skills needed to succeed. The Government have pledged to create three million apprenticeships by 2020.
Mr Hill said: “Apprenticeships that are not targeting skills gaps with contextualised work-place learning will not deliver a full impact on business productivity.”
According to the Confederation of British Industry, employers are supportive of an increase in apprenticeships if the outcome is training that is relevant to businesses and the individual learner.
Mr. Hill added: “There is a lot of uncertainty in the market at the moment. Employers from the largest FTSE 100 companies through to SMEs are trying to understand how to get the most out of the levy.
“Employers need to feel confident that the apprenticeship programmes they are paying for actually fit with the skills gaps they face. When apprenticeships are designed well, there can be a real impact on UK productivity.”
“It’s not just those who are paying the levy who will benefit, as businesses of all sizes can access funding for programmes. Although paying the levy is not optional for those with a £3 million payroll, exploring how to get the most out of the levy is a choice. With the benefits to be achieved through a targeted apprenticeship plan, it’s a choice all organisations should be considering.”