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Nicola Smith: The UK Productivity Challenge: what part can employee voice play?

Wednesday 24 June 2015

High and rising productivity is not just a 'nice to have'. Without continual increases in the volume of output that the UK's workforce produces, there will be fewer gains from growth for us all to share.

Nicola Smith

Nicola Smith is Head of the Economic and Social Affairs Department (ESAD) at the TUC. The Department leads the TUC's work in many key areas of economic and social policy, seeking to influence public and political debate through a comprehensive programme of research, analysis and events.

Nicola Smith


So what can be done?

The TUC's research shows that a substantial part of the explanation for the supposed productivity puzzle is underperformance on growth - our economy is not recovering as rapidly or as strongly as it could if better fiscal policy solutions were in place. While we are creating jobs, too many are in low value sectors and record numbers of those in work still tell researchers that they are under-employed. A stronger recovery would deliver productivity gains.

But that said, while average UK productivity growth was strong before the crash, we already had big challenges in some sectors -  UK's 'long tail' of low pay and low productivity businesses has long been a cause for concern. And the crisis (along with years of stagnation since) will have done some permanent damage. Some sectors, for example North Sea oil and parts of finance, seem likely to record lower productivity gains than before the recession and in other areas, for example parts of building services, low productivity working practices appear to have become even more embedded than they were before the downturn.

So we need solutions that address our macroeconomic challenges, but also address supply side weaknesses - on skills, company decision making, banking practice, industrial policy and of course employee voice.

But just what is employee voice?

The term 'employee voice' is broad and encompasses both individual and collective opportunities to contribute to decision making. Both are important to ensuring effective workplace performance and need to work in tandem for the business benefits to be realised - individual opportunities to provide feedback on an organisation's approach cannot replace collective mechanisms for the voice of the workforce to be heard.

Importantly, while an effective approach to ensuring employee voice needs to include the right to negotiate over terms and conditions, it also needs to provide staff with the chance to be collectively consulted and engaged in operational and strategic planning. It is for this reason that the TUC makes the case for worker representation on company boards, for the wider application of information and collective consultation rights, as well as for the significant benefits that union recognition can bring for employers and their workforces.

So what is the evidence that voice makes a difference?

Applebaum et al have summarised the evidence of a link between workers' voice and productivity. They report that in workplaces where the voice of employees actively informs decision making, the workforce are more motivated and committed and are more likely to develop higher skills. These businesses also benefit from higher levels of information sharing and better coordinated work.

Noting that organisations with mutual respect for rights and responsibilities are more likely to achieve high performance the authors conclude that "in particular, the presence of a union is positively associated with a greater number and greater effectiveness of high performance work practices."

Engaged workforces are vital for high productivity growth, and unions have a big part to play in driving forward this agenda. A genuine productivity plan would put high performing, fairly treated and motivated workforces at its heart.

Read the TUC' full article in Acas' report 'pdf icon Building Productivity in the UK [644kb]'.

Read other blogs in our productivity series

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