The appointment of the Bank of England’s Andy Haldane to lead the government’s work on productivity may herald the advent of some badly needed fresh thinking. In a forensic speech this summer Haldane explained what he sees as the root causes of our current malaise. There was a lot in the speech, but two themes stand out:
- Lack of innovation
- Lack of institutional economic infrastructure.
Simply put, the UK spends far too little on innovation, research, and development. Around a year ago the government announced an ambition to raise R&D spending from its current pitiful rate of around 1.7% of GDP to 2.4% over the course of a decade. The claim was that this would make us “the world’s most innovative economy”. In fact it would still leave us below the OECD average.
As we stand on the brink of a new industrial revolution with emerging technologies such as AI, robotics and breakthroughs in renewable power generation set to redefine what is possible, it is more essential than ever that the UK invests in innovation. This cannot be done without the public sector, which can generate around £1 in private sector R&D for every 30p invested. If the government is serious about innovation then they need to show that commitment with serious investment in public research spending.
But it is one thing developing new tech – integrating it into the workplace is a different challenge altogether. The potential human costs of getting this wrong are huge, yet the institutions that help to manage change at a national and company level have been dangerously hollowed out.
If the so-called fourth industrial revolution is something that is done to workers rather than with them then it will result in huge economic and political blowback.
It should not be revolutionary to suggest that companies that listen to their workforce are more productive and have more capacity to successfully manage the changes needed to increase that productivity further.
Most CEOs would pay lip-service to this idea. But moot the idea that companies should be compelled to listen to their workforce through compulsory collective bargaining and it is as if you have suggested ending capitalism itself.
It is time to call time on this top-heavy economic model and its defenders. The belief that all wisdom in a company is contained within the boardroom is central to our productivity and wages crisis.
If we are serious about ending it, we need to shake up the power imbalance in companies, reverse the decline of collective bargaining and involve everyone, government, employers and trade unions in a national mission to raise productivity.