While most of the talk throughout 2020 was around the threat to our health and wealth from Covid, it is worth remembering that, at the start of the year – in those heady pre-pandemic days – the UK was experiencing a sustained slowdown in productivity growth.
In fact, the UK had been on a continual slide since the 2008 financial crisis, with productivity over the last decade nearly twice as bad as it was in the 1970s (the previous worst decade) and unprecedented in more than two centuries.
Now, as a measure of economic output per number of hours worked by the population, productivity is a key metric in assessing a nation’s economic resilience, as well as its ability to boost GDP and raise wages. And with the average annual increase over the past decade being just 0.3% compared to around 2% before the financial crash despite worked hours having gone up, academics have estimated that this slowdown left productivity almost 20% below the level it would have been had pre-2008 levels been maintained. And that was before Covid hit!
When looking for the reasons behind this slump, you would no doubt be right to point to the enduring economic hangover from 2008, a skills shortage in some sectors, the preference in certain areas to recruit cheap labour rather than invest in more permanent tech systems and the reduction in public investment, not to mention political uncertainty around events such as Brexit. And far be it from me to contest those assumptions but, as a stakeholder in the real estate industry, it does lead me to wonder if our built environment also has a part to play here and to question whether the modern workplace is as effective as it could be in aiding productivity.
Our learnings from 2020 offer more “food for thought” here, with our ability to work remotely and flexibly seen as essential in having kept the economy afloat in the midst of our lockdown restrictions and surely an integral part of a post-Covid solution to boost productivity. The line between our workplaces and our homes has become more blurred than ever, but again it is important to recognise that this societal shift wasn’t created by Covid, it has just been accelerated by it.
Workplaces need to be more about collaboration than mere rows of desks, homes need to be better equipped for homeworking and supporting infrastructure needs to ensure better connectivity (both physical and digital). These aspects were important before, but if we are to stop the gradual decline in productivity and bring us back up to the level of our economic rivals in a post-Covid and post-Brexit climate, they will arguably play a bigger role in our recovery than we might previously have thought. With Covid having put a further dent in our productivity levels in 2020, falling by 1.8% in Q2 compared with the same quarter in 2019, the next decade will tell if our industry – and indeed our country – is up to the task.
The first of our ‘New How: Perspectives’ reports includes a number of articles from our lawyers on the various ways that real estate might be able to help play a part in solving the UK’s productivity puzzle.
Please do access our report by clicking the link to the right of this page. Enjoy.