Poor productivity cost UK £40bn last year

Posted on 14 Oct 2019 by Jonny Williamson

Small and medium businesses in the UK are estimated to have lost 5.6% of business time per year to admin, equating to £40bn of lost economic value in the past 12 months.

A new study suggests that the UK’s productivity puzzle is far from solved,  – in fact, it has worsened.

That’s according to the second annual Productivity Tracker, which investigates the amount of time lost to administrative tasks, published by Sage – a leading provider of cloud business management solutions.

Business Silos Spreadsheets Digital Data Digital Transformation - Stock Image

The Productivity Tracker surveys small and medium-sized businesses across 12 countries, uncovering the percentage of time spent during an average working week on unproductive administrative tasks; time that could be reduced by using technology and digital tools.

For businesses in the UK, the administrative tasks which reportedly consume the most time include accountancy, generating invoices and human resources.

 The analysis reveals that Spain has the highest percentage of business working hours spent on these tasks, at 10.5%.

The nation reporting the lowest amount of time dedicated to these tasks is Canada, where only 1.7% of business’ time is allocated to tasks per year.

Global Snapshot: We Power The Nation – Productivity Insights

Country Currency 2019 % time lost to ‘admin’ 2019 implied productivity loss (bn)
UK GBP 5.6 40.0
US USD 4.9 346.0
Canada CAD 1.7 18.2
Australia AUD 4.8 31.8
Ireland EUR 3.6 2.4
Germany EUR 3.9 30.0
Spain EUR 10.5 32.7
France EUR 7.5 43.2
Brazil BRL 6.2 77.1
South Africa ZAR 3.6 7.2
Switzerland CHF 7.0 48.2
Malaysia MYR 3.7 56.6

This data is contrasted by Sage research which shows that UK businesses are bullish about trade prospects for the coming year.

Sage surveyed 3,000 businesses of all sizes across 12 countries about their outlook on trade, and half of businesses in the UK (49%) expect that the amount of trade that they carry out with customers and suppliers will increase over the next year, while 23% expect the amount of trade to fall.

With attitudes towards trade positive – despite economic and political uncertainty – it’s clear that businesses “are not adopting the tools needed to streamline unproductive activity and reduce the amount of time spent on admin”, the study concludes.

CROP Transforming Maritime Supply Chains - Stock Image

Jonathan Brenton, head of Trade Policy at CBI, commented: “Productivity is the biggest long-term challenge facing the UK economy. We know that companies who export tend to be more productive so encouraging more UK companies to trade globally could be one part of solving the UK’s productivity puzzle.”

Addressing the need for better alignment between policy and industry, Ed Vaizey MP said: “The UK has reached an important moment where digital – be it skills or tools – must be embraced by businesses in order to bring the next wave of economic growth. This means government and industry working together to better to understand the UK’s economy.”

Sabby Gill, MD UK and Ireland at Sage, noted: “Globally, on average, productivity modestly improved yet global economic growth outstripped productivity gains, creating this international productivity deficit.

“As small businesses scale up, hire more staff and contribute further to the economy, even greater value can be unlocked by digitising business admin.”

Gill continued: “In 2019, it is unacceptable that the growth in small and medium-sized businesses, who make up 60% of all private sector employment in the UK, is still hindered by access to digital tools and digital skills.

“With less than a third of those small businesses surveyed in the UK currently using cloud technology for administrative tasks, compared to one in two large businesses – there is a clear gap that must be closed, so that the benefits can be felt by all.”

*All images courtesy of Depositphotos