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Are lazy hybrid workers to blame for productivity slump?
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Productivity paranoia takes hold post-pandemic

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With productivity paranoia tightening its grip, just who is going to address the country’s poor economic output while you’re doing all the work?

16th Mar 2023
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The P word on everyone’s lips this week is productivity. Chancellor Jeremy Hunt invoked it during his “back to work” Budget speech when he promised to address “longstanding productivity issues” arising from low business investment and economic inactivity among women and older people.

Poor economic output has been a bugbear for Rishi Sunak and politicians going back as far as Boris Johnson and George Osborne. It’s easy to see why. Output is flatlining and the skills and people needed to stimulate growth are in short supply. The situation is so acute that Hunt is putting money into childcare and increasing pension allowances to lure the over-50s back to work. 

Yet people who have stayed in frustrating and meaningless jobs are restless too, in spite of the reduced horizons brought on by recession. Speaking of downturns, if we put Brexit to one side, low productivity has been the one consistent feature of the UK’s economic decline over the past decade.

On the BBC Radio 4 Today show last week, Legal & General CEO Sir Nigel Wilson offered this diagnosis when asked why the company’s investment portfolio had declined in UK: “We’d like to invest a lot more here in the UK, but a combination of regulation and policy has made it very difficult to do that over the last 20–30 years.

“We have to recognise we’ve starved our economy of growth equity and the consequence is we are a low growth, low productivity, low wage economy fraught by political infighting.”

As Sir Nigel suggested, austerity isn’t confined to the public sector. Under-investment is just as pervasive in the private sector. The lack of commercial bank finance since 2008 is a contributory factor and in spite of exciting fintech developments in this arena, the high-street banks still control 80%-plus of business loans.

The spectre of defeatism

Company boards and their advisers are just as risk averse, preferring to sit on their cash or even return some of it to investors through share buybacks rather than risking unsustainable expansion in an uncertain and increasingly volatile economy. After what they’ve been through during the past year or two, a little prudence in this area is understandable. But it’s not going to reverse the country’s chronic productivity slump.

Jeremy Hunt’s Budget was all about overcoming such defeatism. After the shambolic blundering of his predecessor, he took a tentative step in this direction by expanding capital allowances to permit 100% expensing of business investments. But as Financial Times economics editor Chris Giles explained on Tuesday, addressing all the underlying reasons for Britain’s low productivity is going to be a long, hard slog.

A personal perspective

Like tax, macroeconomics is one of those unwelcome technical intrusions into my otherwise uncomplicated life as an accountancy commentator. So I was intrigued by an email recently about a survey from workplace platform provider Envoy that touched on matters a little closer to my day-to-day reality as a home worker. 

The press release talked about “productivity paranoia” – not the kind preoccupying Sunak, Hunt and the CEO of Legal & General, but the lingering doubts that hybrid workers feel about their colleagues and managers.

According to the Envoy study, 94% of workers felt their managers trusted them to do their work from anywhere, yet only 24% trusted coworkers to get work done remotely. The scepticism is more marked among older workers: 17% of baby boomers believed their colleagues were productive away from the office, compared to 31% of Gen Z respondents.

For many of us in knowledge industries such as accountancy and journalism, Covid lockdowns demonstrated that working remotely was significantly more productive than in an office setting. Yet the dreaded productivity paranoia emerged from the same place, with both managers and workers harbouring suspicions that their colleagues weren’t working as hard as they were. 

The phrase “productivity paranoia” originated from a Microsoft Office 365 study of working culture change among 20,000 workers released last September. It highlighted the concern among 85% of managers that hybrid working reduced productivity. As a defence mechanism, many remote employees adopted tricks such as occasionally wiggling their mouse to convince monitoring software they were still active – a new kind of pseudo-busyness Microsoft termed “productivity theatre”. You might as well add to that description pointless memos and interminable meetings that create an illusion of activity without ever generating any actions. 

From political to personal

Maybe it’s my age, but I totally get the idea of productivity paranoia. Especially the underlying hypocrisy of thinking I’m great at working on my own, but everyone else is taking the piss.

What intrigues me, though, is how the concept turns the bigger issue of productivity into an individual responsibility. It’s a bit like how many of us think of global warming: rather than blaming extractive hydrocarbon industries and the global governments that serve them, maybe it wouldn’t be so bad if we just used the car less and insulated our homes.

The reality is somewhere in the middle. If we return to productivity, the problem is clearly rooted within the business sphere. Much of what I write about accounting technology is fuelled by the assumption that automation can plug productivity gaps and give people the ability to get more done in less time. If enough companies threw off the dead weight of defeatism and started to invest in high-tech solutions and developing the skills of their employees, maybe productivity could revive. 

That’s clearly what the Chancellor is hoping, but tinkering with three-year tax breaks and throwing a few hundred million pounds at childcare and “returnerships” is not going to shift the underlying dynamic. At the business and employee level, confidence is a by-product of belief and motivation. It’s amazing to see how wholeheartedly people will commit themselves to long-term reforms. But only if they have a good idea of what they’re trying to achieve and a realistic chance of attaining it. 

Before we get to that point in the great productivity challenge, we’re going to need to find politicians who can offer some definable values and a vision of what a productive, high-tech economy would actually look like.

Replies (2)

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By NotAnAccountant2
17th Mar 2023 08:26

I do wonder whether some of the productivity problems in the UK are down to the fact that costs are always pushed to third parties who cannot do anything about it.

From HMRC to utilities to banks, they have a captive audience and are always "experiencing unexpectedly high call volumes" and there doesn't appear to be any incentive for them to improve things.

It is an elementary result of queuing theory that if you have fixed supply and variable demand then the way to guarantee 100% utilization of the supply is to have infinitely long queues. But applying that theorem to HMRC call handlers doesn't take account of the external costs.

1. If you have "infinitely long" queues then your call handlers are going to be stressed out of their mind. It's going to be like an accountant's January all year long.

2. Even if nominally you can do something while "on hold", in practice it's rarely as productive as doing work while undistracted.

3. Even if 2 is possible in practice, the queueing system is *never* optimized to make it as easy as possible for people, after 30 seconds of blaringly loud music you get a whispered "We are sorry for the wait and someone will be with you as soon as possible" - which sends you scrambling for the phone thinking someone has finally taken your call only to realize that you've been distracted again for no reason.

In the past there used to be systems that would say "you are number N in the queue" and you could hear it counting down. It wouldn't be too hard to have a "you are number N in the queue and the estimated wait time is now M minutes" based on the number of calls that were handled in the last 15 minutes say. But I suspect companies (and HMRC) don't want to do that because it will expose just how understaffed their call centres are.

The article talks about excessive regulation - and I'm sure that's a real problem, but I think there's also a problem with lack of regulation - there ought to be minimum standards for answering calls - and those standards need to be reasonable both for huge businesses where one complex query that takes 30 minutes to address shouldn't cause everybody else to be inconvenienced, and tiny businesses where one complex issue might tie up the handler.

They're moving to these "chatbot" style AI, but they're often worse than useless. I've just been trying to change the bank for my direct debit for EDF, tried online using the chat facility, went though all of the questions etc (probably 5-10 minutes) and then "Nobody is available to help at present, you can try again later or try whatsapp". So last night I did it on Whatsapp (It's taking approximately 8 hours to respond!) went though all of the questions, supplied bank account details etc, and then once someone actually responded they asked for all of the same things again. Additionally, while it takes them 8 hours to respond, if you don't respond quickly enough to them it resets back to the chat bot and you have to start all over again. BTDTGTTS

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By dmmarler
24th Mar 2023 04:48

There is a gap in John's analysis "we need to find some politicians", etc., politicians need to serve the country - not their parties or themselves. It is just the same in practice, business, or public sector, we need people in leadership roles who are interested in improvements and have the technical knowledge to see how this can best be achieved, and the means to encourage their colleagues. These people do not come to the surface in most organisations as they upset the status quo, and their abilities are therefore not cherished or promoted (unless they are the Court Jester who can speak truth to power). We need an attitude of continuing improvement, and this is going to be difficult to promote in the present environment.

There has been an attitudinal change to work over the years and individuals' expectations of themselves, their relationship with the State, and much needs to be reset. For example, neither in the UK or in France does it seem to have been made clear that increased public sector pay (or increased State pension costs) ultimately means increased taxation - either directly or indirectly - for everyone. Perhaps classes in economics should start in junior school, together with nutrition, cooking and other life skills.

I agree with Sir Nigel's observations. However, as these things tend to go in cycles I suspect that the UK needs to go through some really major crisis to achieve change. I am not looking forward to it.

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