Sustainability, flexibility and vigour; the pieces of the productivity puzzle?

Looking back…

2014 was the year of resilient businesses, flexible working and the fall of unemployment. Although 2014 didn’t show the fastest growth since the recession, UK PLC demonstrated the most optimistic hiring in Europe. The CIPD found that each low-skilled vacancy attracted 50 applicants on average and each high-skilled vacancy attracted over 20. More importantly, 40% of these applicants were appropriate for the role; signs of a healthy labour market.

This might have something to do with the shifting attitudes of jobseekers. In 2014, a better work/life balance became a priority, meaning employers had to quickly adapt their overall employment package. The 2014 Deloitte Millennial Survey found additionally that young jobseekers were keen to work for ethical organisations, it concluded that to attract and retain talent, businesses need to show millennials that they are in tune with their worldview.

Looking ahead…

Compared to the growth of employment, productivity has grown very little, and we expect this to be a major topic for 2015. Productivity fell significantly during the recession of course, but we haven’t yet returned to pre-recession levels of output per hour and economists are struggling to understand why. This has coined the top buzzword of 2014; the ‘productivity puzzle’. Fixing this will be up to both employers, who need to be prepared to upskill their workforce if they want to survive the impending skills shortage, and the government; our arduous recovery will be intensified by the uncertainty of the upcoming General Election.

Perhaps the productivity puzzle is partly explained by a change in the UK worker demographic. The deepest recession of the last few years has seen an increase in the much talked of ‘zero hours’ contract approach, in both limited hours and non-permanent working arrangements. With UK PLC looking to secure stronger productivity in what will remain a challenging economic environment, RSG’s Managing Director Nick Walrond predicts further growth of specialised freelance resource; ‘we expect to see more vigorous hiring processes, but also greater flexibility regarding how and where people work’, such as working from home, job shares and Bring Your Own Device (BYOD).

Another prediction for the coming months is lower inflation, relating predominantly to the falling price of oil. Cheaper energy will boost the spending power of both people and businesses, and it is even possible that inflation could turn negative over the next few months. While no one is expecting prices to fall for any prolonged period of time, this could mean a widening gap between earnings and prices for a little while. It seems that 2015 will be the year of ‘hanging in there’ as we trudge towards better productivity and higher salaries; it won’t be until next year at least before we start feeling the effects of an improving labour market, but hopefully, it’ll be nice when we get there.

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