Talent on tap but productivity splutters

According to the ONS, the discrepancy between the immigration figures and the number of National Insurance numbers issued to EU nationals can be explained by short-term migration. The regularly reported ONS figures only counted people who were in the UK for a year or more. Those dropping in for a few months wouldn’t make it onto the official figures but still might apply for a NI number with the intention of doing some work.

Once the short-term migrants are added in, the total immigration figures look a lot closer to the NI numbers.

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Chart via Guardian

Neither Michael O’Connor, who first spotted the discrepancy, nor Jonathan Portes, who first raised it with the government, are entirely satisfied with the answer. No doubt this debate will rumble on but what the report has highlighted is the number of short-term EU migrants coming to Britain over the last few years.

There appears to be a churn of EU nationals coming to work for a few months. Some take short-term contracts, others come for seasonal work. A few probably just pop over to see what it’s like before committing themselves to longer-term work. The relatively short distances and cheap travel mean that it is far easier for EU migrants to stay for shorter periods than it is for those further away.

What this also means, though, is that UK employers have access to a vast pool of short-term workers. English is the most widely spoken second language in Europe, therefore it is much easier for British and Irish employers to find workers than it is for employers in any other country. With them being nearby, there will always be plenty available for short periods.

Many EU migrants are overqualified for the work they do. According to the ONS, 40 percent of EU10 and 30 percent of EU14 migrants have qualifications higher than the average for their jobs. It is no surprise, then, that the UK has one of the most highly educated workforces in Europe and also one of the highest rates of over qualification.

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Chart via UK Commission for Employment and Skills

Yet, despite this, the UK’s productivity is in the doldrums and lagging behind most of the other G7 countries.

Constant price GDP per hour worked, actuals and projections, 1997 to 2015

chartimage-4

Chart via ONS International Comparisons of Productivity, February 2016

Furthermore, last year’s Global Skills Index study by Hays and Oxford Economics found that the UK had one of the highest gaps between the skills that employers were looking for and those available in the labour market.

Skills Gaps

What have Britain’s companies done about this? Well they don’t seem think training is the answer because it has been in steady decline for the last decade or so.

So we have flatlining productivity, lagging behind that of most other major economies, and one of the highest skills gaps among the developed economies. Yet our employers have access to a huge pool of well qualified labour, larger, relative to the size of our workforce, than that available to most other countries. Furthermore, this labour is highly flexible, with people ready to travel across Europe for relatively short periods of work. Employers have workers available almost on tap.

Together with relatively light regulation, this ready supply of well-qualified labour must make the UK one of the most benign business environments in the world. Why, then, is our productivity so poor?

As the UK Commission for Employment and Skills commented last year

An important backdrop to productivity performance is that we have a workforce which has never been so well qualified. If we have a better-educated workforce, then we have to look at how their talents are being applied: the workplace must have played a role in that productivity slowdown.

Don’t Britain’s employers have some explaining to do?

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9 Responses to Talent on tap but productivity splutters

  1. David says:

    Explaining ? Who to and Why ? I’ve been out of country for a while now but last time I looked private companies were still free to make their own policies and decisions, sometimes good sometimes bad and the company principal took the benefit / rap as appropriate. If the numbers and pretty charts have any similarity with reality , always in some doubt, then it’s definitely not the best of situations but you’ve got to have a more imaginative solution than just crying foul and , yet again , blame gaming from the touch line or rather executive box !
    I’d add that some of the college training I’ve witnessed is appalling and frequently irrelevant.

  2. That is one of the reasons used for mass immigration, “We have a skills shortage”.

    For example, we cannot get enough British people to be nurses – so that is why we have so many foreign nurses.

    However, this is only because firms and our corrupt governments would rather take the skilled people away from poorer countries – it is cheaper than giving our kids skills.

    For example – the lie that Brits did not want to be nurses – yet thousands apply every year.

    http://www.dailymail.co.uk/news/article-2878312/80-000-UK-students-told-t-train-nurse-Thousands-t-courses-despite-four-five-new-NHS-workers-foreign.html

    http://www.telegraph.co.uk/news/health/news/10376026/Number-of-foreign-nurses-coming-to-UK-doubled-in-three-years-as-NHS-poaches-workers-from-abroad.html

    The anti-democratic EU are allowing incompatible countries to join e.g. with a quarter or less of our wages – we were never going to flood Poland – though many of our jobs have gone there.

    Cameron had been trying to get Turkey in – what a nightmare when they join.

    People only have to look at what is happening – skilled & semi-skilled Brit wages held down – less housing & jobs available to Brits – Pension Pyramid Scam- worsening food/ water/ energy security – more crimes – greater congestion – more NHS overstretch…..

    If you are happy with making the lives of your children and grand-children worse, then vote to stay in the EU.

    There are none so blind…

    • Patricia Leighton says:

      I thought most of the ‘foreign’ nurses and care workers were from Asia, or do you think that’s part of the EU? If you speak to employers a\bout why they recruit people from Poland etc etc they tell you, often sadly, that most of the 1.7 ,million unemployed Brits are unemployable. This article is right about the lack of skills training and weak management but look also at the attitudes etc of many ‘local’ people. This has little to do with EU policy but much to do with British employers. Even if you float off to Trump territory the problems will remain.

      • Firstly – I have wrote many times that I blame corrupt governments – not immigrants who are only doing what many of us would do – go to country with four times or more wages and better life for family.

        Nurses come from the EU as well as Asia.

        However, it is insulting to say nearly two million Brits are unemployable – many have been let down by education in school – it has gone downhill.

        The other excuse is that Brits do not want the jobs – yet my wife and daughters have worked in child care, factories, and cleaning.

        I myself have done factory work before going into IT.

        The lack of skills training is not the fault of Brits – it is corrupt governments and greedy fat-cats who prefer the money in their pocket.

        It is the governments fault for letting the firms get away with it – they exploit the situation they are given.

      • gunnerbear says:

        “they tell you, often sadly, that most of the 1.7 ,million unemployed Brits are unemployable.”

        No, the businesses want cheap labour who will tolerate appalling conditions, low wages and having to share 15 to a house. If the immigration tap was turned off, I’m willing to bet UK businesses would soon be employing UK workers.

        • Indeed – immigrants tolerating a bosses bullying is considered a ‘good work ethic’ by the bosses – that is what they mean.

          They want us Brits to get back to the days when we doffed our cap in deference to them.

          Indeed, many of them love the fact that we have to accept zero hours contracts – which are not really jobs – just the possibility of a few hours work on minimum pay which is not enough to pay essential bills.

          Back to the old days, when the fat boss stood at the factory gate saying to starving workers, “I’ll have you, you and you” – if you do not bow and tug your forelock he will not have you back.

  3. metatone says:

    Isn’t the reality of how productivity is measured that if you choose to use humans, rather than technology or capital, then productivity is stagnant (or goes down.) As we become ever more a service economy, Baumol bites. Our total failure to do anything to help the manufacturing sector has to be part of the story?

  4. ChrisA says:

    I wonder how much of the “productivity” crisis is related to people in the UK doing work on activities outside of the UK which is then not remunerated back to the UK for a long period of time. For instance, someone works on the sale (say) of a cargo of LNG from Australia to China from their desk in London. The revenue from that deal flows to an offshore account of the subsidiary of the head company, but perhaps doesn’t get dividended for many years, while that company continues to grow.

  5. gunnerbear says:

    “An important backdrop to productivity performance is that we have a workforce which has never been so well qualified. If we have a better-educated workforce, then we have to look at how their talents are being applied: the workplace must have played a role in that productivity slowdown.”

    It’s not rocket science – you’ve got skilled younger people willing to work in ‘bottom end jobs’ – the sort of jobs we used think of as school leaver / starter jobs – because the pay, even in those jobs, is way better in the UK than the s**t wages on offer ‘at home’.

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