Higher productivity for the many, or just the few?

John+McDonnell+sj48wV0Wj46mFor many people, increases in education provision and education performance have  contributed to a growth in economic productivity – the increased output per worker.

But it’s the level of investment in physical rather than human capital that’s more important. From the mid-20th century, for example, the ‘Fordist’ production line increased output and reduced prices, but it also deskilled many workers. More recently though, it’s been argued that as production gets more sophisticated and new technologies are introduced, the number of ‘knowledge workers’ will rapidly expand – as a result, governments have increased university participation rates. But the number of graduates has vastly exceeded the number of highly skilled, well paid jobs, with some studies estimating 40% of graduates are over qualified for the work they do.

Yet raising productivity through increasing investment, particularly in the manufacturing sectors continues to be at the centre of Labour’s agenda. This has been reiterated this week in John McDonnell’s call for the Bank of England’s Monetary Policy Committee to be given responsibility for achieving ‘productivity’ targets. (Why a future Labour government would want to maintain the Bank’s ‘independence’ is unclear)


53747789-robotic-arms-in-a-car-plant Raising productivity in manufacturing through the introduction of robotics and artificial intelligence, though increasing output per worker will, under current conditions, inevitably continues to lead to a reduction in the size of the manufacturing workforce. This means that almost everybody is now employed in the service sector;  but increasingly the new  employment is in low skilled, low paid, ‘low productive’ jobs – thus concern grows about the increasing inequality of the ‘second machine age’ 

It’s also wrong to rely on traditional (neo-classical) economic theory and argue that increases in productivity will lead to higher wages. Even those  employed  in the high tech ‘cutting edge’ sectors receive a fraction of the extra value they create.

Giving ‘productivity’ targets such a major role also leads to other problems. An obsession with measuring productivity levels of teachers and NHS professionals has led to a regime of imposed performance targets. Advertising staff developing new techniques to encourage us to buy more of one product rather than another, do not increase the real welfare of society. While spending huge amounts of time coaching their students in exam techniques, so they can outperform other students does not have any educational value. In short, using ‘productivity’ as a barometer for social and economic progress is a minefield. We need to move on.



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