The ‘Quiet Crisis’ – productivity, wages, job quality and skills utilisation

Ewart Keep SKOPE, Oxford University

Across the UK…….

We face a number of challenges within the economy and the labour market. 1. The visible crisis centres on sustainable economic growth and unemployment.

2. The quiet (less visible) crisis encompasses the low wage economy, job quality more broadly, and low productivity and poor workplace innovation.

Low pay is here to stay?

Projections suggest it may take until 2023 for average household incomes to regain their 2008 levels. The growth of part-time work and low wages means that, “it is in-work poverty that is becoming the modern face of hardship” (Ramesh, 2012). 1 in 5 workers earns less than two-thirds median pay. There is no sign of these jobs dwindling in number.

Productivity has slumped

The UK has the 2 nd in the G7:

Japan Canada Italy

-16% +1% +3% lowest productivity per hour worked

Germany France

+24% +24%

USA

+29%

Without increases in productivity across the economy, our capacity to support sustained real wages growth will be limited.

And our skills problems remain acute despite massive government efforts

The OECD’s recent Adult Skills Survey shows that: • • • We are running faster stand still in terms of our relative skills levels. We have a long tail of poorly qualified workers. Many UK young people (16-15) scored worse than older workers (55-65) on literacy.

We have the second lowest demand for workers educated beyond compulsory schooling out of 22 OECD nations.

The UK also has the second highest level of apparent over qualification among its adult workforce.

The way we configure work remains sub-optimal

• Many workplaces continue to design work in ways that stresses routine and repetitive processes.

• This makes poor use of employees’ skills.

• Bottom up workplace innovation is weak

• • • •

Some findings from a Microsoft survey of UK office workers

The average office worker will spend across a working lifetime 90,000 hours at work.

Process driven tasks dominate many workers’ lives. 71% thought ‘a productive day in the office’ meant clearing their e-mails.

51% of 18-25 year olds believe that attending internal meetings signifies ‘productivity’.

When asked, ‘when was the last time you felt you made a major contribution to your organisation?’, 23% responded that they believed they had never managed this. Only 8% thought they had made a major contribution in the last year.

And……..

• • • 54% of office workers admitted to working at the weekends.

This amounted to about 2 billion hours a year of unpaid overtime.

Only 1 in 7 felt inspired by their job. 22% agreed that ‘I typically am not excited by my work – it is just something that I do’.

Innovation absent

• • • • 45% said they had less than 30 minutes day to think without distractions 41% did not feel empowered to think differently 42% did not think they had the opportunity to make a difference at work 38% said, ‘the business is very process-driven and spends little time on doing things differently or being innovative’.

SOURCE: Microsoft, 2013 The Daily Grind

How work is structured really matters

We know that certain configurations of work organisation, job design and people management practices support and embed: 1. Better on-the-job learning (expansive learning environments) 2. Better skills utilisation 3. More workplace innovation 4. Potentially higher levels of productivity

We need workplaces that allow discretionary learning, but…

Discretionary learning workplaces:

Portugal 26% of employees covered Spain UK 20% 35% Netherlands Denmark Sweden Finland 64% 60% 53% 48% Germany

SOURCE: OECD, 2010

44.%

Instead we have a lot of ‘lean’ workplaces

These ‘lean production workplaces’ have lower opportunities for learning and innovation UK 40.6% of employees Netherlands Denmark Sweden Germany 17% 22% 18.5% 19.6%

• • • • • • • • • • • • • • • •

These figures raise the issue of who designs jobs in the UK

Specialists consultants – external OD function within organisation Senior Management Line managers/supervisors (do it this way…) Production managers/process engineers Cost control system/accountants Quality standards designers ISO9000/control and audit system managers HR function Health and safety system, rules and processes ICT and software systems designers/suppliers Plant and equipment suppliers Garage chains/franchise management systems and the specifications they develop Historical precedent Customers – large ones and individuals Statutory regulation (e.g. in care sector) Professional bodies

So what can we do?

Some elements of the ‘quiet crisis’ can best be addressed via national policy. For example, the Social Mobility and Child Poverty Commission (UK government agency) recommended (Social mobility, the next steps (2013)) that we needed to develop “a proper low wage strategy”, and “an explicit hourly pay progression strategy”.

Other areas probably require, at least in part, a bottom-up approach

•

Workplace learning, innovation and skills utilisation

Research tells us that these 3 things are inextricably linked together, and that improving learning through work will tend to improve the others, as work that is configured to support learning will generally allow more bottom-up, employee-driven innovation; and make better use of the skills that are being created. In other words a win/win/win is possible.

• To achieve this, a tailor made approach that fits the needs of individual employers and workplaces is required. National policies can supply a supportive context.

Employee-driven innovation

“employee learning in the workplace – in terms of new knowledge, expertise and problem solving skills – constitutes the raw material for employee-driven innovation. Basically, employee initiatives and autonomy, on the one side, and the structure and conditions of work, on the other side, are important for innovation….innovation….is not conceptualised as separate units, but as embedded in daily work activities and job enactment and social processes in the organisation”

Hoyrup, 2012.

What does research in the workplace tells us matters?

• There has been an increasing amount of research on how people learn in the workplace, and how the learning environment interacts with workplace innovation.

• Much of this suggests that each workplace is different and that tailor-made interventions are essential. Change often has to take place bottom-up.

Learning in, at and through work

We know that learning to support innovation occurs in three ways: 1. Through work processes with learning as a by-product 2. Learning actions located within work 3. More formalised learning processes at or near the workplace

1. Work processes with learning as a by-product:

• • • • • • • Participating in group activities Working alongside others Consulting with colleagues Tackling challenging tasks and roles Problem solving Trying things out Working with clients

• • • • • • • • •

2. Learning actions located within work:

Asking questions Getting information Locating people who act as sources of knowledge Negotiating access Listening and observing Reflecting Learning from mistakes Giving and receiving feedback Using data bases, spreadsheets, technical manuals, etc.

• • • • • • • • •

3. More formalised learning processes:

Being supervised Being coached Being mentored Shadowing Visits to other sites Conferences Courses Working for a qualification Independent study

The problem is:

• The bulk of learning takes place in Boxes 1 and 2 • Most attention has traditionally been focused on Box 3 (not least by policy makers) • Courses are good, but learning embedded within work itself also really matters • Many workplaces afford limited opportunity for 1 and 2. Re-design is required to support learning

Learning factors:

1. Challenge and value of work 2. Feedback and support 3. Confidence, commitment and motivation (to learn) of individual and/or team

Context factors:

1. Allocation and structure of work 2. Encounters and relationships with people at work 3. Individuals’ participation and their expectations of performance and progress

The key factor:

Research suggests that the allocation and structuring of work is central to determining the level and success of learning because it impacted on: 1. The difficulty or challenge of the job 2. The extent to which activity was individual or collaborative 3. The opportunities for meeting, observing and working with people who had more or different expertise, and for forming relationships that provide feedback and support.

Attributes of a ‘learning workplace’, where innovation is possible:

• • • • • • • • • Confidence and trust in managers and colleagues Mutual learning and support Giving and receiving feedback without blame Learning from experience, positive or negative Learning from colleagues, clients and visitors Locating and using knowledge from outside sources Attention to the emotional dimension of work Discussing and reviewing learning opportunities Reviewing work processes and opportunities for quality improvement

And……..

• • Management that sees beyond a competitive strategy based on the delivery of standardised, low specification goods or services, and that wants to pursue incremental product, service and process innovation.

A management that believes that workers at all levels in the organisation can contribute to this agenda, and which organises work and management systems in ways that facilitate this objective.

The government’s skills utilisation policies recognise this:

“Making more effective use of skills is of fundamental importance in leading Scotland back to a higher level of productivity and sustainable growth. This encompasses many

elements including how well learning is transferred to the workplace setting, job design, organisational ambition and

workplace organisation”.

Scottish Government, 2010

• • •

Implications of the research for Union Learning:

Courses are good, but deeper change is often required to facilitate and support wider workplace learning. These means going beyond (important thought they are) ‘time off’ for training and training pay rates.

The kind of changes required need considerable support, and are probably best achieved incrementally, through bespoke activities that support ‘small steps’.

Large, one-size-fits-all government schemes will be of limited use

More lessons:

• • Over time, there is considerable potential to join up learning, skills utilisation and workplace innovation, in ways that might improve both productivity and the quality of working life. Incremental job improvement is possible.

There are major opportunities to join up the work of the SFC, SDS, HIE, SE and SULG