The links between low productivity, low pay and in-work poverty

Concern about the UK’s productivity problem has become widespread. This briefing examines the productivity gap between Britain and its competitors.

It finds that:

  • Fixing the UK’s productivity problem requires action for the lagging parts of the economy – low pay sectors such as retail and hospitality, the long tail of low-productivity firms, and the five million individuals in the UK lacking basic functional literacy or numeracy.
  • We need to make sure the interventions we design to push up productivity are ones that benefit workers, otherwise there is no guarantee that raising productivity will help create an economy that works for all.
  • To raise productivity and drive up pay, productivity strategies for low-wage sectors such as retail and hospitality should focus on: increasing the proportion of workers in on-the-job training; improving management practices; increasing the percentage of workers using ICT; and reducing the share of temporary workers.

Over the past year, JRF has commissioned three pieces of research to inform what productivity strategies for low-wage sectors such as retail and hospitality should look like, and whether driving up national productivity will bring about ‘an economy that works for all’. These are available to download in the related content section below. 

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