It will no doubt surprise UK workers working in distribution warehouses, call centers or the NHS that Liz Truss thinks they could be doing by showing ‘more corruption’.
Judging by comments made when she was chief secretary to the Treasury, the favored candidate for prime minister thinks the UK’s economic problems are due to a work culture quite different from that of communist China.
Truss is right on one point. The UK lags behind many other Western countries in productivity rankings. In the G7 group of major industrial countries, the average worker produces 13% more per hour than the average UK worker and the gap is widening.
Official data also appears to show a divide between London and the rest of the country, with workers in the capital reportedly 80% more productive than the national average. Truss suggests it’s a mindset issue.
The idea, however, that the UK’s deep-rooted economic problems are caused by flight or lack of effort does not stand up to scrutiny. Britain has one of the most deregulated labor markets in the developed world and the average British worker works more hours per week than the European average.
Control and surveillance in many workplaces is intense, with disciplinary action for those who do not meet quotas. It is a country where the management is in control and, for the most part, the workers are not protected by the unions. Insofar as Truss’s analysis has always been true, it is reminiscent of a labor market that has long since disappeared – now replaced by a market in which an army of the gig economy and the self-employed work hard to earn their life.
The real reason for Britain’s low productivity lies elsewhere. UK business investment as a share of national output, or gross domestic product, is the lowest in the G7. The same applies to research and development, to which the United Kingdom devotes 1.7% of its GDP annually, compared to an average of 3.1% for members of the club of developed countries, the Organization for economic development.
The British economic model is based on an abundance of cheap labor and under-investment in modern capital goods and innovative products. Skill levels are higher in a country like Germany because Germans invest more in training.
The difference between Britain and the top performers is not that they work harder than us, but that they work smarter than us. Foreign companies in the UK tend to have higher productivity, so if ‘mindset’ is the issue, it’s management’s mindset that matters.
Nor is it really the case that productivity is higher in London because workers in the capital have a ‘can do’ spirit that is lacking elsewhere. As a paper by researchers at Sheffield Hallam University revealed, when adjusted for factors such as the size of the working-age population, the concentration of high-productivity jobs in finance, and the number of hours worked, the gap practically disappears.
Truss’ team says the remarks made a few years ago were taken out of context, but they seem clear enough. If Boris Johnson’s likely successor thinks more transplant is needed, she fully diagnoses the problem.