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The UK’s Productivity Puzzle (and how IT can help)

by Andrew White  |  March 20, 2015  |  1 Comment

After blogging only the other day about the importance of productivity over employment to the U.S. economy (see Economic Minute #7: The Growth that Doesn’t Satisfy), I noted with some humble pie the exact same argument, but for the UK, in this week’s US print edition of the Economist.

In “Britain: The Economy and productivity- Bargain Basement” the Economist explores the very positive aspects of the UK’s economic recovery.  It’s growth rate in 2014 is the highest of the G7.  But it has purchased this growth at a wage rate that is not sustainable.  There are too many low-wage jobs being created and the efficiency of the work being done is among the lowest in Europe:  “The French could take Friday off and still produce more than Britons do in a week.”

There are some early signs that suggest things might improve.  Wage growth has started an upward trend.  Net business start-ups, critical for “creative destruction”, is at its highest level for 18 years.  But these two conditions will not alone create the productivity growth needed to convert the recent employment growth into profitable growth- and thus sustainable >2% GDP- needed to lift the economy out of the mire.

The article lists a range of policies that would help, all stemming from public and private investment in certain areas:

  • Infrastructure investment (public)
  • Education, training and skills (both)
  • Tax incentives for R&D, capital investment, educational programs (public)
  • Increased capital investment (possible from currently high profit levels) (private)

This is a very similar story for the US, although the UK’s recent growth rate outstrips the US.   And at the same time much political wrangling on both sides of the pond argue for the wrong policies that create disincentives toward productivity improvement behavior.

The reality is that these are urgent priorities for all.  As a worker in the IT space I feel that we have a role to play here.  Investment in software and hardware can help improve productivity.  The challenge for us though is which specific investments to make, how much to invest, and in what order.  Some choices have less to offer in an absolute manner; things like ‘ERP’ and ‘BI’ have almost run their course.  Some newer investments such as advanced analytics and master data management offer more near term opportunities, if understood and explored effectively.  Now all we need are those responsible for “IT” spending to know the difference.

 

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Andrew White
Research VP
8 years at Gartner
22 years IT industry

Andrew White is a Distinguished Analyst and VP. His roles include Chief of Research and Content Lead for Data and Analytics. His main research focus is data and analytics strategy, platforms, and governance. Read Full Bio


Thoughts on The UK’s Productivity Puzzle (and how IT can help)


  1. […] The UK’s Productivity Puzzle (and how IT can help) “…The reality is that these are urgent priorities for all.  As a worker in the IT space I feel that we have a role to play here.  Investment in software and hardware can help improve productivity.  The challenge for us though is which specific investments to make, how much to invest, and in what order.  Some choices have less to offer in an absolute manner; things like ‘ERP’ and ‘BI’ have almost run their course.  Some newer investments such as advanced analytics and master data management offer more near term opportunities, if understood and explored effectively.  Now all we need are those responsible for “IT” spending to know the difference.” Via Andrew White, Gartner […]



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