New research undermines the British government’s upgrade plan


According to a new report, the UK has misdiagnosed its productivity crisis, and if it continues to seek to improve the performance of a large number of extremely inefficient companies, it will not be able to improve living standards.

The findings of the Resolution Foundation and the Economic Performance Center of the London School of Economics challenged the government’s view that upgrading poorly performing companies or poor areas will significantly increase productivity across the UK.

The report found that increasing the productivity of 40% of workers in low-productivity companies by 10% would only increase the overall performance of the UK economy by 1.2%, because the long tail of weak companies lags far behind those that run more efficiently.

The results of the work are contradictory Boris Johnson’s perspective The “high-wage, high-skills, and high-productivity” economy comes from restricting immigration so that truck drivers and other shortage occupations can get more compensation, thereby upgrading the country.

The Chief Executive Officer of the Resolution Foundation, Torsten Bell, aims to formulate policies to improve the lives of low- and middle-income families. He emphasized that the government’s ambitions to improve weaker companies are “very important to employment and locality.”

But he added that pulling people with poor performance “cannot be the answer to the country’s productivity and living standards.”

The study used new data to examine the productivity of individual British companies in more detail than before. As with previous studies, this shows that there are a large number of extremely inefficient companies. The productivity levels of the worst-performing companies—measured by the value created by each employee per hour—are 16 times lower than the top 10% companies.

But research shows that, contrary to earlier research, the UK has a large number of low-productivity companies, which is far from unusual. This means that the long tail effect of weak companies does not explain why the hourly output of British companies is 16% lower than that of economies such as France, Germany, and the United States.

Greg Thwaites, head of research at the Resolution Foundation, said: “The UK has a terrible productivity record into the 2020s, and there is a misdiagnosis of the reasons for this.

He added: “Instead of focusing on the long tail of non-productive companies in the UK, we also need to see improvements in the way companies invest and innovate as well as employee management and training across the economy.”

The report said that instead of pulling the weaker companies, it is better to let stronger and more efficient companies do more work. This will involve a lot of redistribution of work and the closure of many companies.

Although the research admits that it is impossible to relocate workers from small local companies to Goldman Sachs, they argue that the country should pay more attention to investments in machinery, personnel, and better management practices to improve overall performance.

This will not be free, but will depend on the country’s willingness to reduce consumption while increasing investment in the short term in order to become richer and more productive in the future.

“These are not rapid productivity fixes. They may cost money in the short term. But they need to be implemented as part of a new economic strategy to achieve stronger growth and higher living standards in the coming years,” Thwaites Say.



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