Author: Peter Nolan
The British `productivity paradox’: Insights from industrial relations research
A century ago Britain held a commanding position in industrial production and world markets, but the `workshop of the world' spiralled into decline in the first quarter of the twentieth century. Decades later, in the 1960s and 1970s, Britain once more experienced relative decline among the advanced economies. Trade unions’ activities in production and wage bargaining arenas were commonly cited as a key source of underperformance. By the 1980s, the situation was said to be changing, indeed many commentators claimed that the policies pursued by Margaret Thatcher's governments, notably with respect to industrial relations, had successfully halted, even reversed Britain's slide down the international economic league table. A combination of reinvigorated `entrepreneurship’ and enhanced labour market `flexibility’ had produced a much needed spur to workers’ productivity and performance. Or so the argument ran.
In the present period, labour productivity has re-surfaced prominently in research and policy accounts of the weaknesses of the domestic economy. Widely referred to as Britain’s productivity `puzzle’, the relative underperformance of British workplaces, historically and comparatively, is said to remain a mystery. Are there lessons to be drawn from the rich traditions of workplace industrial relations research? The latter, largely neglected in domestic policy analysis, may be well-placed to illuminate the politics of production and structural labour market features that underpin the current British malaise.
The paper has three central aims: to provide an exposition and critique of the conventional wisdom, with reference to recent accounts from the Bank of England; to advance a competing analysis that highlights both the longer term and more recent developments in Britain’s political economy that have produced tendencies towards low investment in plant, people and technology; and, finally, to illuminate the insights that can be secured from a theoretical re-integration of production politics and productivity outcomes.