In October 2001, the Confederation of British Industry and the Trades Union Congress published a joint assessment of the reasons behind the 'productivity gap' between the UK and its major competitors. This work has led to a proposal for a permanent CBI-TUC Productivity Group, which the government will consult on policy development.
On 29 October 2001, the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) published a joint assessment of the reasons behind the 'productivity gap' between the UK and its major competitors. The report, The UK productivity challenge is the result of a programme of work drawn up in response to the Chancellor of the Exchequer's request in October 2000 that the two organisations jointly address a range of issues in an effort to boost the UK's productivity (UK0011197N).
The report sets out the results of discussions in four joint working groups - on investment, skills, technology and innovation, and best practice. These were seen as 'key areas where joint working was likely to bring a measurable benefit, and where tangible outcomes were possible'. In each case the working group was chaired by either the CBI or TUC, and involved representatives from both organisations and from the Regional Development Agencies, the Learning and Skills Council (UK0110111F), Small Business Service, Council for Excellence in Management and Leadership, National Training Organisations and the academic world. The secretariat was provided by the CBI, TUC, Treasury and Department of Trade and Industry (DTI).
Key points from the report include the following:
- On investment, the CBI and TUC agree that the greater economic stability in the UK now offers a real opportunity to improve investment performance, by improving public infrastructure, moving away from the culture of 'short-termism', and improving finance/industry understanding. The report calls on the government to increase the share of GDP devoted to public investment.
- On skills, the two organisations believe that the priorities are to tackle the basic skills problem, increase the proportion of adults with a level 2 National Vocational Qualification and increase the take-up of 'Investors in People' (UK9703111F) by small organisations. They recommend that the government should introduce a training tax credit for employers that are involved in basic skills training or supporting employees working to gain initial qualifications.
- On technology and innovation, the report says the government should introduce a tax credit for research and development (R&D), and enhance the Foresight programme on future priorities for R&D. It also recommends that the government should support an audit of working practices to establish what links exist between specific working practices and subsequent performance.
- On best practice, the CBI and TUC conclude that closing the productivity gap requires the wider adoption of best practice throughout the economy. The two organisations put forward a definition and framework for best practice that they believe should be widely promoted and used by all parties. The report highlights the importance of promoting high-commitment employment practices and the need for much better targeting of business support.
Commenting on the report, Digby Jones, the CBI director-general, said: 'The gap between UK productivity and that of our main European competitors has been a serious problem for decades. It is vital we address it. This agenda for reform represents a substantial step forward'. John Monks, the TUC general secretary, said: 'The real test will be whether government, unions and employers can now make our proposals a reality and if we can continue to work in the spirit of partnership that has shaped this report.'
The Chancellor, Gordon Brown, and trade and industry secretary, Patricia Hewitt, have welcomed the CBI-TUC report while making no commitment to support its proposals. The ministers also welcomed a proposal from the two organisations to create a new, permanent CBI-TUC Productivity Group. Among other tasks, this group will meet ministers twice yearly before the budget and pre-budget report and jointly review progress on productivity issues. In a letter to the CBI and TUC, the ministers say they would find it helpful to be able to use the new body as 'a sounding board in consultation on policy development'.