Unproductive UK companies waste £70bn per year

18-07-2006

British companies wasted £70 billion last year due to poor productivity, new research shows.

Over the past three years, UK businesses had more unproductive labour time than those in any other nation or region except Asia, the study from consulting company Proudfoot found.

Britain's workforce productivity did rise by 6.4 per cent last year according to surveyed executives, overtaking France and Germany.

However, the inefficient use of labour is thought to be costing the UK economy billions of pounds, adding up to an enormous 36 days lost per worker per year.

British employers are tending to overestimate the effectiveness of efficiency improvement measures, claims Proudfoot, while many of them have no action plan to address productivity.

While measures including management ability, work systems, technology use and motivation are needed to improve productivity, many companies are setting themselves lower targets than businesses in competitor economies.

"No company can achieve 100 per cent labour efficiency all of the time but experience shows that 85 per cent is a realistic upper threshold," said chief operating officer of Proudfoot Consulting, Simon Glynn.

"The challenge for the many now is to mirror the few that have so far managed to achieve this level of performance."



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