back to article Why isn't digital fixing the productivity puzzle?

Oh dear. If all this new technology is so amazing, why isn’t it translating into productivity gains? The question has been bothering economists and policy-makers for almost a decade. Since the 2008 financial crisis, productivity in many major Western economies has been flat. A hefty new examination by McKinsey’s eponymous …

  1. Loyal Commenter Silver badge

    It doesn't take a flashy report with pretty graphs...

    ...to tell you that if you pay people badly, they are less productive.

    This translates to lower productivity in societies that have more inequality vs those that are more egalitarian.

    There is a correlation here between productivity falling in the US and UK, and an increase in the gap between the richest and poorest in these countries. Perfectly egalitarian societies don't work either (due to human nature), but there is a happy medium to be struck.

    There's a way of measuring the gap between the rich and poor and turning this into a number, which corresponds quite neatly to how 'healthy' a society's economy is; I can't remember exactly what it's called, but it's all interesting stuff.

    1. Anonymous Coward
      Anonymous Coward

      Re: It doesn't take a flashy report with pretty graphs...

      if you pay people badly, they are less productive.

      That’s not how I read it. If you pay people badly, they don’t have enough money to buy stuff, so your economy won’t grow.

      As I see it, that’s why UBI is important, you need the 99% going out and spending disposable income, not just the 1%.

      1. DougS Silver badge

        Our missing productivity was shifted to China

        "Pay people more and they will work harder" is sort of the corollary of the republican tax cut religion that lower taxes allow people to keep more of what they earn, therefore they will work harder and economic growth makes them pay for themselves.

        "Pay people more so they have more money to buy stuff" is the Henry Ford philosophy - he famously gave raises to people working on his Model T assembly line to a then unheard of $5/day, so that they would have enough money to be able to buy Model Ts themselves.

        The vast majority of the gains made over the past couple decades in the US have gone to the 1%, putting a lie to the claim that if you give rich people more money, they'll invest it and create jobs and grow the economy. That only works if they invest in the US, or buy things made in the US. If they invest in China or spend money on things made in China, they grow the Chinese economy. Oh hey, there's that missing productivity you were looking for!

        1. Anonymous Coward
          Holmes

          Re: Our missing productivity was shifted to China

          EU was a trading Union, but many companies went off to China with their factories, others claimed Europe did not make the product - upshot of it EU ceased providing employment for its members citizens...

          So much for the EU Trading Union.

          1. MonkeyCee Silver badge

            Re: Our missing productivity was shifted to China

            "So much for the EU Trading Union."

            Erm.....

            Even if you ignore the data in the article, where various EU countries are increasing in productivity, you can just look at the current levels of productivity.

            The work done in 5 days by a UK worker is (on average) done in 4 days by a French one, or 3 for a German or Dutch worker. Exactly why productivity differs is up for debate, but that the UK is about the lowest productivity in the EU doesn't have much to do with the EU, since the rest of the EU seems to be improving.

            1. Anonymous Coward
              Anonymous Coward

              Re: Our missing productivity was shifted to China

              The money made per hour of work in the UK over 5 days is (on average) done in 4 days by a French one......

              Productivity, as it is measured, has nothing what so ever to do with how much work is done, or how much of an actual product is made, only the revenue per hour. As such it is a bullshit measurement.

              1. Doctor Syntax Silver badge

                Re: Our missing productivity was shifted to China

                "Productivity, as it is measured, has nothing what so ever to do with how much work is done, or how much of an actual product is made, only the revenue per hour. As such it is a bullshit measurement."

                Quite so. If you increase the output in widgets per hour by 10% and reduce the price to sell more your measured productivity by sales may not rise at all. So have you raised productivity or not? Common sense suggests you have, the dismal science says you haven't. I don't know why you collected downvotes.

        2. MonkeyCee Silver badge

          Re: Our missing productivity was shifted to China

          " "Pay people more so they have more money to buy stuff" is the Henry Ford philosophy - he famously gave raises to people working on his Model T assembly line to a then unheard of $5/day, so that they would have enough money to be able to buy Model Ts themselves. "

          And gave them a second day off a week (Saturday) so they could drive their car somewhere.

          Ford is, despite his obvious business credentials, practically a Marxist in today's terms. He has written some very insightful opinions on exactly how the "free" market works, with particular vehemence for the bankers.

          1. Loyal Commenter Silver badge

            Re: Our missing productivity was shifted to China

            Ford is, despite his obvious business credentials, practically a Marxist in today's terms. He has written some very insightful opinions on exactly how the "free" market works, with particular vehemence for the bankers.

            The more observant might notice the correlation between his dislike for bankers and his renowned anti-Semitism (and his infamous anti-Semitic publications entitled, "the International Jew") and draw conclusions as to why this was his opinion. He may have been 'virtually a Marxist' in some respects, but in others he was far closer to being a fascist.

            It probably tells us something about how right-wing the failed project of neo-liberal capitalism has become that Ford would be thought of as left-wing in any way.

            1. LucreLout Silver badge

              Re: Our missing productivity was shifted to China

              It probably tells us something about how right-wing the failed project of neo-liberal capitalism has become

              And yet, the whole world over, Capitalism has time and again prove throughout all of human history to be the only system that increases living standards for all; while Socialism & Communism have impoverished all their nations and sent millions to an early death.

              Capitalism isn't perfect, but it is closer than every other system ever devised by anyone.

              1. Loyal Commenter Silver badge

                Re: Our missing productivity was shifted to China

                And yet, the whole world over, Capitalism has time and again prove throughout all of human history to be the only system that increases living standards for all; while Socialism & Communism have impoverished all their nations and sent millions to an early death.

                I think you missed the pertinent bit of my post which was the 'neo-liberal' bit; unfettered capitalism is as much a failure as an unfettered command economy. The market needs regulation, or eventually, all the cash ends up being controlled by a monopoly.

                You also appear to be confusing economics with politics when you contrast capitalism (an economic construct) with socialism (a political one), and are wilfully ignoring the very successful European socialist countries (such as Finland and Denmark) where the standard of living is much higher that that which most in the UK and US enjoy.

                D- must try harder

                1. LucreLout Silver badge

                  Re: Our missing productivity was shifted to China

                  <iI think you missed the pertinent bit of my post which was the 'neo-liberal' bit; unfettered capitalism is as much a failure as an unfettered command economy.</i>

                  I didn't miss it; its just that you're talking nonsense. F-.

                  The market needs regulation, or eventually, all the cash ends up being controlled by a monopoly.

                  And yet for hundreds of years, before ever regulators were conjured up out of some committee, the cash was not controleld by a monompoly. You can;t just make stuff up and ignore a thousand years of capitalism.

                  You also appear to be confusing economics with politics when you contrast capitalism (an economic construct) with socialism (a political one)

                  No confusion on my part, but you seem not to understand the connection between the two. Socialism is an economic system as much as it is a political one - all socialist paradises fail for the same reason - they go broke.

                  and are wilfully ignoring the very successful European socialist countries (such as Finland and Denmark) where the standard of living is much higher that that which most in the UK and US enjoy.

                  Quack quack oops. You just listed two capitalist countries. Denmark is NOT socialist, nor is Finland.

                  You've also confused yourself regarding standard of living which is not higher in Denmark than the UK and certainly not the USA. For example, the average Dane can't afford to drive very far because cars of obscenely expensive to own and run. Cheap as chips here.

                  Seriously, if you want to have a debate you're going to have to learn some facts and let them inform you of an opinion. You can't just show up, make up some guff that fits your world view, and expect the rest of us to take it as fact. It isn't. Must try harder.

              2. RJG

                Re: Our missing productivity was shifted to China

                > And yet, the whole world over, Capitalism has time and again prove throughout all of human history to be the only system that increases living standards for all; while Socialism & Communism have impoverished all their nations and sent millions to an early death.

                Ah. the old capitalism is the only way that works argument.

                Which relies heavilly on defning "all" to exclude the brown people the East India Company exploited, all the Africans who were the product being sold, all the Irish who conveniently starved to death, all the native Americans who were not using their land properly....... and so on.

                Is that the system you are promoting?

                1. Charles 9 Silver badge

                  Re: Our missing productivity was shifted to China

                  I put it this way. Eventually, the game becomes zero-sum. Once that happens, SOMEONE'S going to lose (and by lose, I mean die horribly). Otherwise, resources run out and EVERYONE loses. That's why I use the desert and the bottle of water example. Eventually, you hit Cold Equations and humanity has to be put aside in order for SOME to live.

                2. bombastic bob Silver badge
                  Thumb Down

                  Re: Our missing productivity was shifted to China

                  "the old capitalism is the only way that works argument"

                  "relies heavilly on defning "all" to exclude the brown people" (etc.)

                  "Is that the system you are promoting?"

                  thanks for tossing in the 'emotion bomb' of racism into an otherwise sane discussion, like a Hand Grenade.

                  I officially downvote the HELL out of your comment, on that basis.

                3. LucreLout Silver badge

                  Re: Our missing productivity was shifted to China

                  Which relies heavilly on defning "all" to exclude the brown people the East India Company exploited, all the Africans who were the product being sold, all the Irish who conveniently starved to death, all the native Americans who were not using their land properly....... and so on.

                  You've not thought this through, have you?

                  Slavery is nothing to do with capitalism. African tribes had been enslaving each other for hundreds of years before ever they saw a westerner, let alone a capitalist. Living standards in all capitalist african nations were far higher than they were prior to capitalism and far lower now they've become demented socialism inspired dictatorships.

                  The Irish starved dut to over reliance on a single crop, and failure to forsee potato blight as a thing.

              3. JimC Silver badge

                Re: Capitalism isn't perfect,

                But are we really in a capitalist society any more? It seems to me that increasingly the capital is held by institutions, and the decisions are made not by the owners of the capital, but by executives who milk an institution or a business for a while, then move on the the next one and milk that.

        3. DanielsLateToTheParty

          Re: Our missing productivity was shifted to China

          I'm a freelance programmer.

          One client only comes to me occasionally, typically when his Indian outsourcers are struggling with a task. Recently he freely admitted that although I charge 3~4x as much per hour he knows that I can complete such tasks reliably and in 1/8th the time. My interpretation of this is that it pays to keep a thoroughbred in the stable, and that there is no substitute for quality. The race for lower costs has incurred hidden costs elsewhere. For example, a cheap tool is more likely to break in your hand and when it does you have to stop work and go buy another one (the throw-away society is another rant for another day) and that's lost time ergo lost productivity. You may already know this concept as false economy.

          The short term solution is to ensure that common goods are produced everywhere, not just in the poorest places, and then we continue to trade for specialist goods that we don't have here. In the long term it will be necessary for the rest of the world to improve their standards which will then increase everyone's quality of life. Who knows, maybe we'll even help educate them.

      2. Doctor Syntax Silver badge

        Re: It doesn't take a flashy report with pretty graphs...

        "If you pay people badly, they don’t have enough money to buy stuff, so your economy won’t grow."

        It also means the market is apt to become price sensitive so prices have to be kept down. If you measure productivity by the overall income you get by selling widgets rather than by the number of widgets you produce then having to keep prices down means that productivity will appear lower. Which raises the question of whether periods of high productivity aren't at least in part, an artefact of inflation?

    2. MonkeyCee Silver badge

      Re: It doesn't take a flashy report with pretty graphs...

      "There's a way of measuring the gap between the rich and poor and turning this into a number, which corresponds quite neatly to how 'healthy' a society's economy is; "

      The Gini index? That's the most common one.

      Like all macro economic models, it's often quite good as an indicator, and pretty useless as a diagnostic as to why things are different.

    3. Blank Reg

      Re: It doesn't take a flashy report with pretty graphs...

      I remember seeing the CEO of Costco explaining why they pay more than minimum wage. He said that people making minimum wage put in minimum wage effort.

      You get what you pay for, if you want employees that don't care about their work and have no loyalty, then go ahead and pay them the minimum that you can get away with.

      1. bombastic bob Silver badge
        Devil

        Re: It doesn't take a flashy report with pretty graphs...

        "people making minimum wage put in minimum wage effort." "You get what you pay for"

        This is converging closer to reality, now.

        You can make economic criticism from both the right and left, talk about effective take-home wage vs what you're actually paid (in which case, tax cuts are an obvious stimulus to the economy from a 'consumption' point of view), or the 'widening gap between rich and poor' in which case there's apparent exploitation going on [as has happened in the past, ca "robber baron" era].

        But each of these is an inadequate explanation on its own, as they're interrelated. When the employees don't have enough $ to live on comfortably, it screws with their psyche, and when this causes a perception of "have vs have not" envy, making things worse. [keep in mind that high tax rates on 'the rich' are actually on upper middle class WAGE EARNERS, and tend to WIDEN that gap, because it keeps upper middle class from BECOMING 'the rich' - prior to last December, 'the rich' were getting away with paying LOWER taxes because the income wasn't WAGE income - but I digress].

        Here are some of the negative aspects that create productivity problems, in my view:

        1. Hiring the wrong person. This is ALWAYS expensive. There are many reasons why, from race/sex/whatever quotas [gummint mandates and lawsuits] to HR incompetence. "What Color is your Parachute" talks about this, from what I recall.

        2. Actual collusion to pay people less - this happened in Silly Valley a while back.

        3. Inefficient management - too many meetings, for example, or focus on "social" instead of "work output". You can 'feel good' about it all damn day and NOT get a damn thing done! This isn't helping anybody.

        4. Punishing achievement and rewarding mediocrity. This is a complex issue, because it happens in the tax code [work more/harder, less effective $ per hour], and seeing promotions based on something OTHER than merit (like race/sex/whatever quotas). Productivity and quality must be rewarded, or else you get "who gives a flying FEEL any more" with dead-end jobs and looking to go elsewhere all the time.

        5. "Process of the week" involving the latest new, shiny way to do engineering work, like "Agile" done wrong by everyone that attempts it. Scrum meetings in which "the junior guy" gets an equal say, for example, and management going along with it because it FEELS good to let 'the newbie' get a chance to contribute.

        Anyway, that's my $.10 on it. You basically can't point at a single thing, but when you look at ALL of it, there could be a pattern...

        1. LucreLout Silver badge

          Re: It doesn't take a flashy report with pretty graphs...

          or the 'widening gap between rich and poor' in which case there's apparent exploitation going on

          The problem people parroting on about this gap between rich and poor don't understand is that it is absolutely inevitable, and also totally irrelevant.

          Why is it inevitable? Ok, try these simple facts for size.

          A full time job (40 hour week) will earn, at minimum wage levels, 40x7.83x52 = £16,286 gross. After tax that amounts to £14,354. For now we'll ignore the public sector as that produces massive distortions which I'll return to later.

          The FTSE 100 yields 3.9% Yes, there are higher yields available, and I'm going to ignore capital gains because we're talking for the moment about income. Anyone with £417,600 invested in the ftse would be generating passive income greater than the post tax income of the minimum wage worker.

          That sounds like a lot, however, the average ft salary is £27,600, or £22,047 after tax.£7,693 difference. The FTSE has grown about 5.4% per year over the past 20 years, excluding dividends. So combined about 9.3% per annum. A quick calculation shows it would take 19 years 11 months to hit the target where an average income worker could replicate passively the entire post tax income of the minimum wage worker. The average working lifetime is somewhat longer than that. Thus, it is inevitable that incomes will diverge.

          Ok, they diverge, so why is that not a bad thing?

          Lets take the worlds richest men. Bill Gates, Warren Buffet, Jeff Bezos, and Carlos Slim. Does the size, speed, oppulence of their third yacht have any real world impact upon me at all? No, none whatsoever. The only adverse effect it can produce is envy, which is an undesireable trait and a character flaw in those choosing that path.

          Does it matter if David BEckham has 20 Ferraris, 1, or none? Not to me. It won't impact me at all.

          Does it matter if Linus Torvalds is a millionaire? Nope - I could not care less. His wealth has no impact upon me at all.

          I've never been able to understand why socialists get so obsessed to the point of dsitraction by other peoples money. It's none of their concern, or business.

          You mentioned the public sector Lout. Well, yes, I did. The actual cost of relicating a public sector pension in payment using money purchase pension pots is very close to 50% of salary. Thus, an average public sector worker is already socking away more than enough wealth to surpass our minimum wage Joe, even if they treat their whole income as coke 7 hookers money. every single penny of it. 25% of people in work are in a public sector role, thus we have a baked in inescapable inequality of income due to pension accrual.

          Income inequality is, as I said, inevitable and wholly irrelevant to the real world.

      2. sprograms

        Re: It doesn't take a flashy report with pretty graphs...

        Or as seen on a T-shirt: "Pay peanuts? Expect monkeys."

    4. katrinab Silver badge

      Re: It doesn't take a flashy report with pretty graphs...

      "It doesn't take a flashy report with pretty graphs...

      ...to tell you that if you pay people badly, they are less productive."

      No, it is not quite that.

      To give an example, I did an evaluation the other day to see if some invoice scanning software would be better than employing humans to do it manually.

      The result was that the cost per invoice processed would work out about the same, and that changing the system would potentially cause teething problems with no end benefit.

      If wages had been higher, or the cost of the software was cheaper, then we would have taken a different decision.

      1. Anonymous Coward
        Anonymous Coward

        Re: It doesn't take a flashy report with pretty graphs...

        Actually, even if the scanning software had 100% accuracy and lower cost, there would still be a an advantage to the “manual” way of working, i.e. filing invoices in binders and inputting data manually. When the tax auditors come (as they inevitably do), it’s a lot more fun to show them a dusty storage room filled with rows upon rows of binders with paper invoices. In those scenarios they also tend to look less closely, which may be beneficial for the audited party. Or so I’ve been told. *cough*

        1. Wensleydale Cheese Silver badge

          Re: It doesn't take a flashy report with pretty graphs...

          "Actually, even if the scanning software had 100% accuracy and lower cost, there would still be a an advantage to the “manual” way of working, i.e. filing invoices in binders and inputting data manually. "

          My experience of that was the girls doing the filing had a pretty shrewd idea of how well the company was doing and which departments or product lines were or were not performing well.

    5. The Man Who Fell To Earth Silver badge
      FAIL

      Re: It doesn't take a flashy report with pretty graphs...

      To understand that if you want to increase productivity in the workplace, set the damn firewall to block all social media connections during working hours. Especially connections to Facebook, Tinder, Snapchat, Instagram & Twitter.

    6. ecofeco Silver badge

      Re: It doesn't take a flashy report with pretty graphs...

      It's both.

      Lack of motivation and unable to support a 75% retail driven economy.

    7. Graybyrd
      Trollface

      Re: It doesn't take a flashy report with pretty graphs...

      Well, obviously the solution becomes one of getting rid of all those unproductive minimum wage people (who also constitute a burden on government services) by removing certain artificial props such as health care (we're well along that path in the US), food subsidies, rent subsidies, free public education, and other undeserved handouts. Hopefully they'll soon get a clue and up themselves via their own bootstraps (assuming they have boots) or they'll die off. Our esteemed Utah Senator, the Honorable Orrin Hatch (R) essentially said as much: "People don't deserve what they cannot pay for!" He was mostly referring to health care: no gelt for insurance, no healthcare. And don't EVEN ask about subsidies!

      Problem solved. Then it becomes an "equality issue" of who's richer than whom. Gates vs Zuckerberg, et. al. Sorry, Sen. Hatch, you're not even in the same universe. Better luck next incarnation.

      Of course, this may result in a bit of market distortion... but it's a free market, right?

      1. Charles 9 Silver badge

        Re: It doesn't take a flashy report with pretty graphs...

        But this raises a moral conundrum of its own, because the obvious comeback to "let 'em DIE" is always going to be, "Care to volunteer for the B Ark?" No one wants to be on a dead end. It causes despearation, raises the crime rate, and so on. The survival instinct pretty much means you won't get many (if ANY) volunteers.

        I put it this way. It's 12 people stuck in the middle of the desert with only one bottle of water. No matter how you try to solve it, it won't end well.

        1. LucreLout Silver badge

          Re: It doesn't take a flashy report with pretty graphs...

          I put it this way. It's 12 people stuck in the middle of the desert with only one bottle of water. No matter how you try to solve it, it won't end well.

          Socialism will save the day. They'll all just vote themselves a bigger share of someone elses water.

          Oh, wait.....

    8. joed

      Re: It doesn't take a flashy report with pretty graphs...

      I'm surprised by US' productivity loss of .2% and curious how much worse would it really be once the extra (unpaid) time spent by workers (to achieve this disappointing results) was really accounted for.

  2. GrumpyOldBloke

    That's easy, since 2008 a massive expansion of credit into the parasitical financial services sector to shuffle the cards without actually producing anything. How can you measure productivity growth when money has no value. Secondly the productive parts of the economy are now so wrapped in red tape and security theater that they have stopped expanding. Sovereign risk from armies of useless public servants who have forgotten that they offer no real value to an economy has killed most Western economies. Check out Australia's latest defense trade controls act and the criminalization of R&D to see the stupidity up close. Productivity has not improved because throughout most of the world the parasitical classes have been elevated - check CEO's salaries, ever expanding copyright terms or the rise of patent trolls - and the productive classes are now herded, tax surveilled, imprisoned and bound. Until people wake up and stand up Western culture, innovation and productivity is effectively at an end. We will be reduced to celebrating useless apps that allow us to share our underwear or our socks.

    1. bombastic bob Silver badge
      Pint

      "the productive parts of the economy are now so wrapped in red tape and security theater that they have stopped expanding"

      A *VERY* good way of saying it! Beer, sir!

  3. Pete 2 Silver badge

    Well, there's your problem!

    > Productivity is defined as GDP output divided by the total of hours worked

    I used to think that improving "productivity" meant getting factory floor workers to speed-up a bit. To reduce the distance they had to walk or the number of turns they had to give a screw.

    But this measure, that includes ALL jobs. shows this view is faulty.

    When you have so many "workers" who do absolutely nothing that contributes to the bottom line, you have a problem. When so many of them do nothing except go to meetings, fill in tick-box processes that don't shift more "stuff" (or services) out the door, or when you need to get approval from 5 different - and often competing to avoid responsibility - departments for pretty much anything then it is no surprise that your business will be inefficient, unproductive. Employing too many people who just sit at a desk and too few who actually do / make the stuff that is sold to your lucky customers.

    1. DougS Silver badge

      Re: Well, there's your problem!

      But you need the paper pushers (well email pushers these days) in a company with a lot of high tech because coordination becomes a real problem. Granted, many of them are useless but that's true of any job that has a skill threshold: 80% of the people do 40% of the work, 10% of the people do 80% of the work, and 10% of the people do -20% of the work (i.e. they fuck things up and create more work for the rest)

      1. Doctor Syntax Silver badge

        Re: Well, there's your problem!

        "10% of the people do -20% of the work"

        Where do you work where things are this good?

    2. Anonymous Coward
      Anonymous Coward

      Re: Well, there's your problem!

      In my youth I went to a thing called 'Young Enterprise". In a group of 7

      1 wanted to General Manager

      1 wanted to be Accountant

      2 wanted to be Secretaries

      3 wanted to be Salespeople

      Leaving only two to make stuff. I was the one at the band-saw, the other guy had the glue-gun.

      The others did not want to get their hands dirty or chip their nails.

      I also know of a software company where an old friend was the ONLY coder; all the others were 'managers' and had much higher wages.

      Moral: people want to look good rather than build anything

      1. LucreLout Silver badge

        Re: Well, there's your problem!

        I also know of a software company where an old friend was the ONLY coder; all the others were 'managers' and had much higher wages.

        Ultimately this is the root of the problem.

        Management isn't a particularly difficult skill, yet every line manager I know expects to be paid more money than anyone under them in a hierarchy. Its a fundamentally flawed perspective.

        If your job entails mostly working in Outlook, PowerPoint, and Project, then you are not adding anything like as much value to your business than someone working mostly in Visual Studio, IntelliJ, or PyCharm. Other tools exist, but you get the drift.

        We need to turn the pay pyramid on its head - If all you do is manage a team of coders then you need to earn less than those coders. If you manage a team of beancounters then the same applies. Management isn't difficult, most people can do it comparably as well as their current line management hierarchy. We need to start recognising those who do the work, rather than presenting it as their output to their manager, and so on up the hierarchy.

        One UK bank I worked at had 18 different managers between me and the CEO. None of them had clue #1 about what I actually did, or how to do it. As a result, they simply weren't adding any value to the output - if we'd cut out say the lowest 15 of them, literally nothing would change other than their need to acquire some real skills and get a real job.

        1. Anonymous Coward
          Anonymous Coward

          Re: Well, there's your problem!

          Management isn't a particularly difficult skill, yet every line manager I know expects to be paid more money than anyone under them in a hierarchy. Its a fundamentally flawed perspective.

          This is true, but it is inevitable in a culture where you take a happy engineer and the only way for them to be promoted is to become an unhappy manager, and people who a) hate their jobs tend to be bad at them and b) in compensation for (a) expect to be paid more. Companies with true "technical tracks" are exceedingly rare.

        2. Doctor Syntax Silver badge

          Re: Well, there's your problem!

          "Management isn't a particularly difficult skill"

          Are you sure? Good ones seem to be a rare commodity.

        3. bombastic bob Silver badge
          Devil

          Re: Well, there's your problem!

          "If all you do is manage a team of coders then you need to earn less than those coders."

          hold on there, that's a bad generalization to make [though I'm sure there are a lot of UNproductive 'managers' out there].

          Management done properly makes it look as though the manager isn't doing anything at all.

          It's the manager's job to divvy up the work assignments so that things get done. It's the manager's job to make sure that interactions happen in a SANE way. If that means "Scrum meeting" then it's probably being done WRONG. if it means individual 1-on-1 meetings (as simple as "how are things going") followed up by some kind of a policy decision, then it's probably being done right. If your problems with 'management' are being dealt with [or there aren't any] it's being done right. if you're constantly getting jerked around and following whatever Sales wants done, it's probably being done wrong.

          I would think that departmental productivity should be the #1 factor in determining how much a manager is paid. And SOME managers might be worth 10 times the wage of the average developer, just on the fact that developers become so much more productive when "that guy" is running the show.

          So YMMV on management salary. But yeah, a proper measuring device is in order.

        4. Russell Chapman Esq.

          Re: Well, there's your problem!

          Good management is a real skill. I'm mentoring at a rapidly growing company which designs and produces automated production lines for the car iindustry. When you have, mechanical designers, coders, electrical system designers, hydraulic system designers, the robotics guys, the vision system guys, the machinists, the assembly workers, project managers, the accounts dept, sales dept, purchasing dept; all these need to work together and that needs effective management, communication skills, co-ordination and leadership. If not then everything would be chaos. There is a good reason why the skipper of a ship gets paid more than a deckhand, he is responsible for getting the ship to port and not bumping into anything along the way.

          Good management is also about realizing the value of everybody on your team, make sure you employ the right people, in fact this company has never had to fire anybody, a very small number have left, but nobody has ever been booted out. Look after your people and they will help you look after the business.

          Result: massive expansion and a full order book for the rest of the year plus an extra 2 month salary bonus paid to everybody in the company.

    3. Doctor Syntax Silver badge

      Re: Well, there's your problem!

      "Employing too many people who just sit at a desk and too few who actually do / make the stuff that is sold to your lucky customers."

      Some of those people sitting at desks are actually designing the next product - coding, designing H/W or whatever. Of course what they do is incomprehensible to management so isn't important and can be got rid of on the next cycle of managment stuff, i.e. cutting headcount.

  4. Anonymous Coward
    Alien

    Inflation is lack of productivity in spending

    So go suck on that, you economists you.

    Why use it as a measure of economic health ?

    #Occupy the Middle Ground

    Economists are still trying to make John Maynard Keynes and Milton Freedman's economics work, but neither one has an end condition. So weather for political or just dumb reasons Governments and Economists keep dragging the economy hard right or hard left.

    The secret is they were correcting for an over condition, and once the conditions reflected the 'middle' one should stop the recovery measures. - plumb the depths like in old sailing ships.

    #Productivity

    Productivity in both saving and spending is required - Some over balanced fanatic or lost economist should not be let loose on their own bank balance, let alone their own economy.

    #Demographics

    They there's the fact of demographic units, each unit contain schooling, hospitals employment and accommodation, administration and shopping etc for a finite population. This is repeated over and over

    the only time it means something is when there is too much pressure, before another unit spawns nearby or is too little pressure, after one has started early or is emptying.

    #Free Market

    Need over Wants, The free market is not free, but managed.

    What most people imagine a more wild market, or lasy fare (which means the police don't look too hard at what you're doing ;-)

    #Innovation

    Innovation is the creation and provision of solutions for problems needing solutions, NOT some idea being forced upon others as a method to overcome market forces and resistance,. that is just bullying.

    #Total Crap

    Banks said it would save them money to sack tellers and employ computers, then soon afterward they were complaining that all that IT was costing them too much and they had to increase fees. They reduce their tax liability by claiming them as expenses while also charging their customers for it.

    #Full Circle

    Inflation is lack of productivity in spending, seems we cannot get away from it. you get charged for it anyway up front or indirectly by negative gearing, tax write offs and so on.

    1. Loyal Commenter Silver badge

      Re: Inflation is lack of productivity in spending

      What most people imagine a more wild market, or lasy fare laissez faire* (which means the police don't look too hard at what you're doing ;-)

      FTFY...

      *French for (roughly) "leave it be".

  5. Anonymous Coward
    Anonymous Coward

    If people don't get paid enough money...

    ...they don't have money to buy the goods made and services provided.

    With zero hours contracts, poverty wages and offshored jobs, of course no-one has any money to spend.

    Pay people enough to be able to eat, live in a house, take a holiday and raise a family, then have some cash left to buy things, then we will return to productivity.

    At present the money feeds up to the 1% who avoid tax and hoard their cash generated by the poor.

    1. Anonymous Coward
      Anonymous Coward

      Re: If people don't get paid enough money...

      From the article: "Half of the answer, MGI suggests, comes from stimulating demand particularly of low-income consumers..."

      Does the MGI really think that getting people with no money to spend more is an answer?

      Is this some weird branch of Bistromathics, become real?

      1. Doctor Syntax Silver badge

        Re: If people don't get paid enough money...

        "Does the MGI really think that getting people with no money to spend more is an answer?"

        Possibly by "stimulating demand" MGI mean "providing them with money to spend".

    2. Tom 7 Silver badge

      Re: If people don't get paid enough money...

      But there is the employees attitude to work. If you feel like you are being paid the minimum wage and have no real chance of improvement then you will walk down the street like a sullen teenager with your head down and not worry about improving things for yourself or your company. If you can motivate that employee with the possibility of some light at the end of the tunnel then they may sing a happy tune and spot opportunities to improve themselves and possibly your company.

      I was in a certain sportsthingies for fat people store the other day looking for some trainers that might fit my size 12s wide fit and all the large sizes were at the bottom of the piles of boxes, as far away from the view of someone who might wear them as possible. I mentioned this to the minimum wage employee who I finally managed to attract to my aid and pretty much both of us lost the will to live half way down the stack.

    3. Tom 7 Silver badge

      Re: If people don't get paid enough money...

      "At present the money feeds up to the 1% who avoid tax and hoard their cash generated by the poor."

      And the middle classes who pay their way and tax actually pay their employees wages top up and their healthcare, education, roads, police etc etc that the 1% need to make their businesses run.

      1. bombastic bob Silver badge
        Thumb Down

        Re: If people don't get paid enough money...

        1% this, 1% that...

        you're STILL doing that 'Occupy' crap? That's SO lame...

        'Scuse me, your "envy politics" is showing.

  6. ecofeco Silver badge

    Wots this?!

    People without enough money can't support a 75% retail driven economy?

    That's just crazy commie talk!

  7. Anonymous Coward
    Anonymous Coward

    In terms of productivity they are trying to measure the wrong thing and measuring it very badly - e.g. the numbers for services companies are basically guesses, and neither small companies ( less than 50 employees ) nor the self-employed are included at all.

    With regard to wages, it may be worth noting that real earnings (i.e. after inflation) have decreased by ~10% since 2005 .

    1. ecofeco Silver badge

      Measure the last 35 years. It's even worse.

  8. LucreLout Silver badge

    Millenials

    Sorry Millenials, but its not good puzzling over why productivity growth dropped off when your cohort hit the workforce, without looking at that cohort. [1]

    There is no practical use for most Media Studies degrees and they earn a lower pay premium than almost every other degree. Add to that we have more business studies students each year than Computing and Engineering combined. If everyone is a manager, who is doing the actual work? [2]

    Given that is is now not unusual to leave university with £50k of debt for a degree that we have established neither the student nor the economy really need, repaying that debt must also be a drag on productivity. A Millenial repaying £200 a month on a loan means they don't have that money to spend in a shop (making the shop assitant more productive), or a bar (making the bartender more productive) etc.

    The number of graduates per year has more than trippled, and I would politely suggest that the number of job opportunities actually requiring at least one degree to perform may have increased, but not on that scale. [3]

    Smartphone / social media obsession cannot be helping output per worker as the opportunity for distractions increases.

    Further down the spectrum we have minimum wage. That has levelled up a lot of jobs where people would work harder because they were working their way up a low income scale, where as now all low level work is rewarded equally the effort level should logically decline.

    It's not necessarily Millenials fault, by the way, but pretending there hasn't been a shift when this huge generation has entered the workplace would be spectacularly miguided.

    1 - https://waitbutwhy.com/2013/09/why-generation-y-yuppies-are-unhappy.html

    2 - https://www.hesa.ac.uk/data-and-analysis/students/what-study

    3 - http://researchbriefings.files.parliament.uk/documents/SN04252/SN04252.pdf

    1. Doctor Syntax Silver badge

      Re: Millenials

      "The number of graduates per year has more than tripled"

      This was one of Blair's departures from reality. He thought that having graduates become half the population would increase productivity without (a) thinking how to re-jig the entire economy so that half the jobs would be what had then been thought of as "graduate jobs"* and (b) coming up with any way of paying for it other than by imposing swinging debts on the graduates. The latter was all pert of the taxing the future approach which included pension funds.

      *This was solved, of course, by exporting as many non-graduate jobs as possible to low wage economies. This held down inflation**.

      ** That's inflation as measured by pretending that housing cost rises weren't inflation.

    2. bombastic bob Silver badge
      Pint

      Re: Millenials

      "Smartphone / social media obsession cannot be helping output per worker as the opportunity for distractions increases."

      A *BRILLIANT* point! beer?

      [I might add, the (apparently 'millenial') trending use of online and cloudy 'things' which, from what I can tell, aren't quite as good as the ones they were patterned after, seems to be a part of it. And, if you view the world through a 4-inch screen (like many millenials seem to do), you get a very NARROW perspective of it, in particular, one that's _marketed_ to you, so that you don't easily see anything else...]

  9. fredj

    Interesting but as always these analyses count wages as spendable income. That is just not true. All sorts of taxes are taken from income to feed the gaping maw of, "THE STATE". What is left is barely pocket money for most workers and the companies that employ them.

    President Trump has put into place a very good idea. It is to cut tax on companies so that they can function properly . This has had an immediate effect on the USA. Employment is falling and people are able to work for real incomes as opposed to pocket money. Of course the EU thinks trump has opened the doors of hell. Maybe but what he has done is pushed all sorts of ideas for the state to spend other peoples money into hell where the perpetrators and their ideas must surely have escaped from.

    ( I am just moralising using flowery language)

    1. Charles 9 Silver badge

      And yet when you look behind the curtain, you find there's a lot of what a certain TV show called "Shuckin' and Jivin'".

      Take Walmart. You hear the good news of Walmart raising wages. What you DON'T hear is the OTHER news of it CLOSING Sam's Club stores. IOW, more pay for workers, but fewer workers. Look what happens in a lot of places where higher minimum wages are forced. Many places up and move out of those places. This is because prudent business sense demands you pay only as much as you dare (look at it from the business owner's perspective; labor is a COST, often one of the biggest, and costs must be minimized in order to stay competitive).

    2. ecofeco Silver badge

      Give it rest. Trump had accomplished nothing. He is just like any johnny comely braggart who takes credit for other's accomplishments. You know, manglement.

    3. bombastic bob Silver badge
      Devil

      "Employment is falling"

      you meant UNemployment is falling, right? Fixed.

  10. Anonymous Coward
    Anonymous Coward

    Are we talking Digitisation for real or The Kings New Clothes??

    From my point of view there is an awful lot of utter tripe being heaped onto the altar called Digitisation, largely by sundry Pointy Haired Bosses, HR departments, marketing departments and other sundry technologically incompetent halfwits whose closest involvement with IT should be to stand underneath a packing case of UPS batteries being hoisted on a frayed strop.

    So far, we have been infected with a hotchpotch "Intranet Experience", a Performance appraisal site that seems designed to foster employees' psychotic tendencies, a set of boilerplate text and assembly tools that seems ideal for a low grade cosmetics company, an Employee Social Media Experience that is supposed to be the be-all and end all.

    We won't even go near the abysmal Internet experience potential customers have to endure.

    Bring on the Golgofrinchian B-Ark -but keep a few telephone sanitisers back.

    1. Wensleydale Cheese Silver badge

      Re: Are we talking Digitisation for real or The Kings New Clothes??

      "Bring on the Golgofrinchian B-Ark -but keep a few telephone sanitisers back."

      One thing where Douglas Adams' opinion differed from my own experience was including the telephone sanitisers in the B-Ark contingent. When I started work, lots of folks used to smoke while on the phone and the handsets would accumulate a thick layer of nicotine.

      At the place which used telephone sanitisers on a regular basis the phones were pleasant to use.

  11. Binraider666

    Knowledge = power. Time = money. As every engineer knows, work / time = power. Therefore work / money = knowledge. Rearranging, we find work / knowledge = money. As knowledge approaches zero,money becomes infinite. The less you know, the more you make... That's me screwed, then.

  12. Anonymous Coward
    Anonymous Coward

    The economy cannot keep growing forever, you know ?

    As it grows it just becomes more and more complex and unequal, until a reset is unavoidable, then it can start growing again.

    Except that generally means a big war. And we have nuclear weapons these days. Oops!

    We might need more time after the next reset...

    Oh and we're running out of resources too, so probably no fancy fossil fuel powered and electic stuff next time !

    At least this means we might actually be able to hit those climate targets ! (Though there's of course three decades of warming by sheer inertia to deal with.)

    I know, I know, if only we had listened to the people predicting all this in the 70's we might have been able to change course, but well, people never learn !

    1. LucreLout Silver badge

      Re: The economy cannot keep growing forever, you know ?

      As it grows it just becomes more and more complex and unequal, until a reset is unavoidable, then it can start growing again.

      Sorry, but that is nought but ignorance. There is nothing, absolutely nothing, to stop the economy growing in perpituity.

      Someone on minimum wage today would be rich beyond the dreams of avarice compared to someone living just a few hundred years ago. Central heating, indooor plumbing (plumbing at all!), carpets, wall paper, affordable fruit or veg or meat, education opporunties, health care the like of which would have appeared as magic, rapid transport (ok, not very fast, but a bus will beat a horse to 100 miles).....

      That, all of it, has come about by economic expansion. Low income people 200 years from now will look back at todays wealthy, and have opportunities available to them todays people could not buy.

      10 raspberry pi's have the compute power of a 70s mainframe. Todays Ford Fiesta can have more power than the 80s Ferrari. Wealth is a by product of digging stuff out of the ground, and of innovation. We're not running out of innovation and we have most of what we dug available to us (recycling, gold doesn't stop existing etc etc). We have more economically extractable oil available today than at any time in history. And lets face it, Elon Musk alone is well on the way to ending the oil age.

      Inequality is inevitable because nature is not equal. How do you propose to equalise intelligence? Or strength? Or beauty? Or charisma? Or health? Or age? How will you equalise motivation and application of self? Without equalising those things first, you could devide the wealth up equally amongst us all, and 12 months from now we would again have rich and poor people. All of the rich may not again be rich, but most of the poor will again be poor.

  13. Boris the Cockroach Silver badge
    IT Angle

    Low productivity

    wells that easy to understand and complain about.....people dont make enough money to spend or their jobs (zero hours contracts) dont reward them stabley enough to enable them to go out and spend..

    Low wage also equal low motivation

    But this is not the whole story, its not even 1/2 the story...

    And heres the real reason for low productivity

    Why bother investing in machines that can do 20 peoples work when you can hire 20 min wagers on ZHC for cheaper?

    So instead of 1 person driving a truck pulling an automatic strawberry picker, you have 10 pickers working away.

    Both pick 10 000 strawberries a day but by the magic of maths, 1 picker can only produce 10% of the truck driver... which equals low productivity.. especially if the pickers are in the UK and the truck driver is in Germany.....

    But investment means risk... and you try explaining to the bank manager why he should loan you 250 000 quid for a machine to make fruit picking more efficient.... (or any other form of tech for that matter)

    1. flokie

      Re: Low productivity

      I had a fairly similar example in mind - car washes. Go to France eg. and you'll only find automatic car washes with minimal staff. In the UK your car will probably get washed by a ZHC worker.

      (Now that I think of it maybe not as good an example as yours with car washes in the UK probably reporting higher activity and productivity than they should: cash businesses not uncommonly used for money laundering)

      Unemployment is indeed much lower in the UK but how many are stuck in such low productivity jobs? And people in such jobs won't have any more spending power than someone unemployed in France or Germany. It's also worth noting that the UK has the least generous unemployment compensation in Western Europe, which in turn drives people into low productivity jobs.

      1. Charles 9 Silver badge

        Re: Low productivity

        IOW, what's gonna happen when people on the bottom start to realize all the upward mobility is gone. Too many people, not enough breadwinning jobs, and little room to make more of them because nearly everything society needs is already being met.

      2. Doctor Syntax Silver badge

        Re: Low productivity

        " It's also worth noting that the UK has the least generous unemployment compensation in Western Europe, which in turn drives people into low productivity jobs."

        The odd thing about this is that the low-wage strawberry pickers seem to be coming from Eastern Europe. Why is this happening if unemployment pay isn't that good? Are productivity figures ignoring a large black economy?

        1. Charles 9 Silver badge

          Re: Low productivity

          Because they're coming from EVEN MORE dire straits. When you're coming from a place where you're lucky to get the equivalent of a fiver A DAY, almost anywhere* is upward mobility.

          * This, of course, clashes with the issue of the cost of living, which tends to be inflexible for a given location but varies considerably BY location.

          1. flokie

            Re: Low productivity

            Fruit picking is seasonal work and cost of living won't be much of an issue for migrant workers as they'll be housed in temporary accommodation on or near the farms. The devaluation of the pound is the reason many workers chose not to come back last year.

  14. Christian Berger Silver badge

    "Digitalization" is a stupid word

    Particularly since some people see "Digitalization" as some people seem to think that "Office Software", "Smartphones" or badly implemented Chats like "Slack" are part of this. Those are productivity destroyers causing more distractions and more time wasted on things people aren't good at.

    Computers can greatly increase your productivity if you use/program them directly, but believing that you can just put a computer in front of someone and expect them to be more productive is stupid.

  15. Daniel von Asmuth Bronze badge
    Paris Hilton

    It depends on the definition

    These people seem to be looking at the correlation between profits (GDP growth) and unemployment (total hours worked). It would seem probable that economic growth leads to lower unemployment rates and there are figures to support that. However, it could lead to the growth of hours worked exceeding the increase in poducts sold, and eventually to the next recession.

    Or you define productivity as units produced per (wo)man-hour. That will lead to the conclusion that a single overseer running a factory with hundreds of robots equals fantastic productivity. Isaac Asimov realised this in 'The Naked Sun'. It just means that all that robot labor is not counted.

    I thought the industrial revolution proceeded in three waves:

    1) James Watt invents steam engine, leading to big centralised factories

    2) Henry Ford introduces the assembly line, leading to high labour division

    3) Norbert Wiener introduces cybernetics, where workers' hands and eyes are replaced by detectors and actuators.

    The microprocessor revolution appears to have decreased the productivity of office workers and increased the number of offices, but that was offset by huge growth in the IT sector, which became highly productive.

    The latter nineties showed renewed economic activities, until the dot-com bubble burst, which led to stagnation, clearly seen in the IT sector. The size of the workforce has shrunk due to automation, specifically in the U.S.A. (China and India still grew). which meant lower disposable income for the masses (the GDP effect is offset by a steep increase of the wealth of millionaires and billionaires) and lower demand for goods, which lowers economic growth.

  16. Colin Tree

    people are the economy

    Jeez, how many times have I said "people are the economy"

    company profits and trickle down, phooey

    dunderhead economists and business dudes are simplistic, cut costs, increase profits

    how about pay people more, they'll have more money to purchase expensive shit and all companies will make more profit

    they don't look at the larger circulation of money, only their own limited self interest and profit

    the economy is a big machine which fails if all the wheels aren't greased sufficiently

    1. Charles 9 Silver badge

      Re: people are the economy

      "how about pay people more, they'll have more money to purchase expensive shit and all companies will make more profit"

      Because one of the competitors will get the smart idea to STAY low, undercut the competition, and steal all the business for themselves. This will force everyone else to react similarly in order to not get priced out of business. Remember, SOMEONE'S gonna cheat. And there are those who are banking on the economy breaking down.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019