Productivity puzzle remains unsolved as UK lags 18% behind G7 – and apprenticeships won’t fix it

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The UK is still lagging 18 percentage points behind for average productivity out of the G7 nations and a Lincolnshire Managing Director has said that more apprenticeships may not be enough.

The latest figures, released by the Office of National Statistics (ONS) show the UK had below average productivity growth in terms of output per worker in 2015.

The government plans to introduce the upcoming apprenticeship levy, where from April 2017 businesses with an annual payroll of £3 million with have to pay a levy at a rate of 0.5% of their payroll, to try and boost productivity.

However, Neil Buck, Managing Director of The Personnel Department in Lincoln, believes that the shortfall is caused by more than just a lack of skilled labour.

Neil said: “The fact is that productivity is actually affected by lots of different things in a business e.g. the organisational culture, team approach, the environment – think PESTLE, communication channels, leadership and management styles and so on, hence the skills and training opportunities are just one part of the mix.”

According to the Confederation of British Industry, employers are supportive of an increase in apprenticeships if the outcome is training that is relevant to businesses and the individual learner.

Neil addedd: “Small businesses always have to keep an eye on the bottom line which means productivity and profit targets should be met by having the right skills and talent in their business, no matter who delivers it.

“Apprenticeships are a great opportunity for both parties generally and often financially subsidised but I think that the majority of businesses in Lincolnshire won’t have an annual wage bill of £3 million hence the apprenticeship levy won’t really be of any significance to them.

“If they need the skills they will have to go out and find them when they need them. However, I think many employers are just sitting tight right now after all the recent uncertainty and people aren’t choosing to move around too much.”

Steve Hill, External Engagement Director at The Open University, believes that the apprenticeship levy will need to be tailored to address the skilled needs of businesses.

He said: “There is a lot of uncertainty in the market at the moment. Employers from the largest FTSE 100 companies through to SMEs are trying to understand how to get the most out of the levy.

“Employers need to feel confident that the apprenticeship programmes they are paying for actually fit with the skills gaps they face. When apprenticeships are designed well, there can be a real impact on UK productivity.”