Why we must pull every lever to boost productivity - Beckie Hart

Of course, you would. In fact, I’m betting everyone reading these words would not only welcome an increase to their own salaries but would love to award pay bumps to their colleagues too.

Sounds great, doesn’t it? It’s certainly something that seems to appeal to leading politicians at both ends of the political spectrum, who have been using their party conferences to bang the drum for evolving the UK into a high-wage society.

That’s an idea we can all – including the CBI – get on board with. However, to deliver it, we need to get the sequencing right.

A high-wage economy must be the destination of the UK’s post-pandemic recovery, not the starting point. Simply raising wages to combat labour shortages impacting supply chains right now won’t solve the problem – in fact, it’s far more likely to trigger price rises just when people can least afford them.

That’s why a longer-term strategy is so essential – and urgent – and why this is such a crucial moment in our recovery.

Make no mistake, the optimism of August has made way for dampened spirits in autumn. The bounce-back has been put on hold. As the demand switch has been suddenly flicked on, supply has struggled to keep pace, creating headaches around rising prices, skills shortages and material scarcity.

Fundamentally we need higher productivity. Without that boost, the higher wages we want become unaffordable. If wages go up, and skills and investment don’t, we just create a recipe for higher prices and living costs. How do we solve that equation?

Partnership is key. Government and business working together to deliver rapid, evidence-based solutions to the economic challenges we face now, and in the longer term. To do that, we proposed creating a ‘COBR-level’ Government & Business Taskforce with the political clout to tackle challenges head-on.

The government’s subsequent creation of the Supply Chain Advisory Group, headed by Sir David Lewis, is a step in the right direction, and one that shows the Government is listening to the concerns of business. The onus is now on us to work closely with Sir David’s team to provide the insight and expertise they need to deliver effective solutions.

But there’s also more to do. We can’t adequately resolve supply chain issues without building a better, more demand-led skills system. With industry ready to make big, long-term bets on areas like digital, they need a consistent stream of talent to fill the roles of the future. At the moment, there’s a bit of a disconnect between supply and demand.

While Government obviously has a role to play in resolving that mismatch, businesses have to play their part too. With 90 per cent of the current workforce expected to need some form of retraining in the next decade, business has to step up to the plate on upskilling and retraining.

We also need to work the investment side of the ledger. We urgently need an investment step-change in Britain and the Chancellor has a chance to unlock this later in the month. The capital investment deduction, announced in March, was a big positive, and business will be looking for him to continue drawing from that playbook in the weeks ahead.

With a spending review imminent, a global investment summit on the horizon and world leaders gathering in Glasgow for COP26, the next few weeks won’t just be crucial for our economic recovery, they’ll show the world how post-Brexit Britain approaches the challenges on its doorstep and beyond.

The real path to economic success lies in longer-term thinking. By using all of the levers at our disposal to boost productivity, attract investment and upskill our workforce, we can deliver a sustainable recovery that delivers growth, keeps us competitive and, ultimately, puts more pounds in people’s pockets.

Now that sounds like a plan we can all support.

By Beckie Hart - Regional Director of the CBI