Judging by comments made when she was chief secretary to the Treasury, the prime ministerial front-runner believes the UK’s economic problems are due to a work culture quite different from that in communist China. Trasos is right in one respect. The UK lags behind many other western countries in the productivity table. Across the G7 group of major industrial nations, the average worker produces 13% more per hour than the average British worker, and the gap is widening. Official figures also appear to show a gap between London and the rest of the country, with workers in the capital apparently 80% more productive than the national average. Truss suggests that this is a matter of mindset. The idea, however, that the UK’s deep-seated economic problems are caused by avoidance or a lack of effort does not stand up to serious scrutiny. Britain has one of the most deregulated labor markets in the developed world and the average British worker puts in more hours per week than the European average. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Monitoring and surveillance in many workplaces is intense, with disciplinary action for those who do not meet quotas. This is a country where management has the upper hand and, for the most part, workers are not protected by unions. To the extent that Truss’s analysis was ever true, it points to a labor market that has long since disappeared – now replaced by one in which an army of gig economy and self-employed workers work for a living. The real reason for Britain’s poor productivity lies elsewhere. UK business investment as a share of national output, or gross domestic product, is the lowest in the G7. It’s a similar story with research and development, on which the UK devotes 1.7% of GDP annually, compared to an average of 3.1% for members of the developed country club, the Organization for Economic Co-operation and Development. Britain’s economic model is based on an abundance of cheap labor and insufficient investment in modern capital equipment and product innovation. Skill levels are higher in a country like Germany because Germans invest more in education. The difference between Britain and the best performing countries 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 it’s about ‘attitude’ then it’s management’s attitude that counts. Nor is it actually the case that productivity is higher in London because workers in the capital lack the can-do spirit that is lacking elsewhere. As a paper by researchers at Sheffield Hallam University found, after adjusting 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 virtually disappears. Truss’ team says the observations made a few years ago have been taken out of context, but they seem pretty clear. If Boris Johnson’s potential successor thinks he needs more graft, he is completely misdiagnosing the problem.
