12th February Journal Column

Web-LogoBy Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

Summer might seem like a lifetime ago, but it’s only been seven months since the chancellor first announced that tackling low productivity was to be one of the Government’s main priorities in the coming year.

Following the announcement, the Treasury was quick to release the ‘productivity plan’ and the chancellor reiterated his big plans for productivity in November’s Autumn Statement. Talking about it is all well and good but we need to see actions, not just hear words.

Boosting productivity across the whole economy is still one of the government’s biggest targets, but since last summer we haven’t seen a lot of evidence to show that they are trying to find solutions to the problem.

Office for National Statistics (ONS) data shows that productivity has improved very little in the last 20 years. Productivity, measured by construction output per worker and construction output per hour, shows that in the past 20 years output per worker has only increased by 1.4 per cent and output per hour only slightly more at 3.3 per cent – still not very impressive statistics, but is it all about numbers?

In the same time period, overall industry output has risen 21 per cent and the number of construction jobs is up 17.1 per cent. So progress is happening, it’s just at a very slow pace.

These statistics don’t take into account improvements the industry has made in safety standards and the quality of work it is producing. The way productivity is measured does not adjust for quality or standards.

For an outsider looking into the industry and focussing on the statistics, productivity may appear low, and it certainly is compared to other industries, but is it simply down to the way in which work is carried out – making it difficult for the industry to set targets and see any improvement?
Although workforce has increased recently, we’re still around 100,000 jobs shy of the pre-recession peak. So once again, the skills shortage is causing us problems. Can we really expect companies to improve productivity when they don’t have the workforce and are struggling to recruit?

The cyclical nature of the industry makes it difficult for firms to improve their efficiency and productivity. Offsite manufacturing has been suggested as a way to solve this problem, but manufacturing would not be reflected in construction output statistics, so it would have no effect on our productivity.

I wouldn’t necessarily say we have a productivity problem, the fact we are still years behind other industries in terms of technology just means we have more opportunities to take.

Yes, we’ve come on leaps and bounds in terms of technology and training, but we still have a long way to go – improvements in both areas will improve productivity.

I have every faith that businesses can pull together and boost the industry’s productivity, it might sound like a tough challenge, but we’ve overcome much more!