Much is being written about the UK`s low levels of productivity, but totally unsurprisingly, few, if any, mention some rather crucial points. Lack of investment in new plant and machinery is identified as being hugely important, but is not the method of paying bosses and managers significant here? If CEOs can only be motivated by the prospect of their share options rising in value, their focus will inevitably be placed on the firm`s profits in the short-term. They will not be incentivised to invest funds in new machinery and technology, which would increase productivity at a stroke, when such spending will reduce the immediate profits of the business, and therefore, reduce the value of its shares. The business sector must surely realise this type of payment for company chiefs is holding back the country`s productivity, but is doing nothing to alleviate the problem. Any suggestion of government interference would, of course, be viewed by the likes of John Cridland of the CBI as "business-bashing".
Even if there was a change of renumeration method, and investment increased, productivity is not just a question of having the most up-to-date machinery, as the efforts and abilities of the workers matter hugely. However, if the dubious point of lack of skills being a relevant factor is important, should the government be contemplating cuts to the education services of up to 10%? Furthermore, if motivating bosses can only be achieved by huge financial reward, the case for similar treatment for every worker is incontrovertible; shouldn`t workers not only be receiving decent pay, and thereby avoiding the necessity to rely on in-work benefits to survive, but actually be sharing in the profits their efforts bring to the firms? The news that "one in three workers worries about how to stretch their pay packet until the end of the month" is absolutely appalling, and an indictment of our society.
The huge gaps in pay between bosses and workers is the real problem with Britain`s economy, and low productivity the result of the lack of foresight of our politicians and business leaders.