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New tech not enough to boost productivity
Work smarter to narrow gap on US and Germany

By Steve Ranger

Published: Tuesday 21 February 2006

Businesses must rethink their attitude towards managing their employees if the UK is to close the productivity gap on countries such as Germany and the US.

Better workplace management practices must be promoted across all sectors of the economy, according to a report by the Chartered Institute of Personnel and Development (CIPD).

When adjusted for hours worked, UK workers are 16 per cent less productive than those in the US, and 15 per cent less productive than German workers.

The CIPD names inadequate people management as a major factor underlying the productivity gap. This is not the result of differences in the capital, skill levels or research and development across countries but the result of the different ways these resources are put to use.

The lack of a productivity surge in the UK is surprising, said the CIPD, not least because of the widespread adoption during the past decade of state-of-the-art IT. The US, it points out, has seen a surge in productivity in the 'new economy' era.

International productivity comparisons, due to be published later this week, are expected to show that the UK continues to trail France, Germany and the US in the productivity stakes. It is "high time" the government took a fresh policy approach to boosting workplace productivity, said Dr John Philpott, chief economist at the CIPD.

Part of the problem is weaknesses in government policy. Management and working practices should be central to the government's productivity agenda, the CIPD said, and the value of people management should be promoted especially at small and medium-sized businesses.

Greater emphasis should be placed on work-related training and work-based learning, rather than simply the acquisition of formal academic or vocational qualifications. The CIPD is also suggesting a "sensible limit on working hours", which it argues will encourage employers to get the most out of staff to achieve more in each hour worked.

Like all Chancellors, Gordon Brown has struggled against the reluctance of UK businesses to invest enough in capital, skills and technology, said Philpott.

He said in a statement: "The underlying problem, mostly overlooked by government policy, is that the vast majority of UK organisations still don't make a good enough fist of managing the productive resources they do have, especially their people.

"'Work smarter, not harder' has become a modern management mantra. The trouble is too few UK organisations practice what they preach, while the government struggles to develop a coherent policy approach to improving workplace productivity."