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Talk about productivity is just being negative

As you'll know, I'm rarely one to get angry. Irritated, yes. Narked, sometimes. Annoyed frequently. But when you're the sole male representative in a household of four (the other three being a former vegetarian and two teenage girls), you learn to let many of those potential flash points simply wash over you. Keep calm and carry on, as the saying goes. I don't need to meditate for hours or picture myself as a tree or listen to whale music or play with rain sticks. Take my word on it when I say that I'm basically a pretty level headed guy.

Now, with the worry of a general election and all the associated uncertainty behind us, with the economy still expanding, with employment going up, and with negative inflation bringing prices down, this should be a contented time - a time for optimism at the very least. But there are many people who simply can't enjoy a happy headline, who have to find a negative. These people are only happy when they're miserable, and even then they're not pleased. Hence we have all the negative talk about productivity at the moment. And yes, it's got me angry. This is not anger of Bruce Banner proportions (if you haven't seen either of the Avengers movies, I'd urge you do so; if you haven't seen any of the Hulk movies, don't). But I'm definitely cross.

UK productivity is a puzzle, says the Bank of England, wondering why it's supposedly at its weakest for yonks. The ONS goes further, describing the weak UK productivity as unprecedented. Many others tell the same story - and these were probably the same people who not so long ago were telling us, for example, that our car plants were the most productive in the world, which was why so many manufacturing operations were being located here.

Surely there's a simple answer here, and it lies in the fact that employment is rising. Productivity is a measure of the output per head. If you employ one person working at full capacity, and you see the potential of more orders on the horizon, it makes sense to employ a second person. Does that mean your output will double over night? Of course not. What you've done is made an investment in the future. When companies take on new people, what we should expect is, initially, for productivity per head to drop - but in terms of the health of the economy it's a meaningless measure. Indeed, even if you never get back to the level of productivity you had without those new people, output still goes up, revenue goes up, profit goes up. You have growth.

You could even argue that it's the same with investment in new machinery. I've yet to see such an investment where to some extent or other the company in question didn't end up riding the change curve before the investment really began to pay off. And what about the productivity of the people tasked with operating that new machinery - either new people to the business (see above) or existing people who then find themselves working across an additional line. Yes, initially productivity will drop, but you've made an investment for the future.

Making productivity the headline quite frankly misses the point in the UK manufacturing debate. Instead, can't we simply celebrate the rising employment and economic growth?
Mark Simms, Editor

 
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