Wages go up, growth slows down, and government reviews the productivity puzzle.
CMD Recruitment keeps a close eye on the trends that impact business growth and can help you find the talent that gives your business competitive advantage whatever the economic climate.
The latest stats show that the UK economy grew by just 0.1% in the first quarter of 2018, ending 1.2% up on last year. Despite slow growth, the highest employment rates in 50 years are putting pressure on employers to pay more. After a ten-year pay squeeze, wages are now increasing more than prices.
But slow growth and low productivity are big problems for the long-term health of the UK economy because we need economic growth to support wage growth.
For over a decade now, the output from each hour worked has been much lower than expected. This has become known as the productivity puzzle, and we’ve covered it on our blog before.
Productivity is measured in output per hour worked and has been below expectations since 2008.
“Productivity matters because it is a key driver of economic growth, social prosperity and living standards. In the long run, a country’s ability to raise living standards is almost entirely down to its ability to raise productivity” - Business Productivity Review
With the figures nearly the same as they were in 2009, UK government has taken decisive action to tackle this challenge by setting up a review to ask small businesses for the answer to this problem.
The Department for Business, Energy and Industrial Strategy have launched a Business Productivity Review to “better understand the factors affecting the productivity of UK business.”
The review invites small and medium business owners to have their say and is open until July 4th.
Strangely, it seems particularly keen to get submissions from low productivity businesses, “Our working definition of a low productivity business is a business with levels of productivity below the UK median. As the median productivity of firms in different sectors and size categories varies, we are considering these dimensions through the review. We welcome comments on the merit of focusing on this segment of businesses.”
What will usefully result from this exercise seems unclear.
The notion that low productivity small businesses will come forth with great insights into investment strategy seems optimistic. Perhaps it’s more likely that low productivity businesses will be unaware of the UK median benchmarks for their sector, or the Business Productivity review, or even the existence of the Department for Business, Energy and Industrial Strategy. Time will tell, as results from this review are due in the autumn.
At CMD Recruitment, we know that great people are the key to improving business growth and boosting productivity. Our experienced team of consultants take the time to understand our client’s needs in depth and use the latest recruitment technologies and best practice procedures to get the best person for the job. If you’re looking to grow your team and expand your business, contact us today to start your search.