The Tories are ignoring one of the biggest problems facing our economy: low productivity

The Tories have set the tone for the economy over the next five years with a Queen’s Speech that includes a bill on employment which penalises young people looking for employment; a bill on workers’ rights which takes away workers’ rights; and a bill on devolution which doesn’t propose devolving any specific powers.

And it completely ignores one of the biggest problems facing our economy: our very poor levels of productivity.

Low productivity in the UK economy should worry the Government. The UK’s output per hour is lower than in 2010 and 17% below the rest of the G7, with the widest productivity gap since 1992.

It takes British workers until the end of Friday to produce what a German or American worker has produced by Thursday. That’s nothing to do with the hard work put in by British workers, it’s entirely to do with a Government that has failed on investment.

The Government, after 2010, choked off investment in infrastructure which damaged the confidence of the private sector to invest. They failed to reform the banking sector with regional and sectoral banks, so it remained difficult for businesses to secure the investment they needed to grow.

With a globalizing and digitizing economy we need a workforce with far better skills. But instead of that we have continuing attacks on further education, failure to properly recognise the importance of vocational education, and pressure on schools to teach learning by rote instead of the flexible skills young people need for tomorrow’s economy.

Low productivity leads to low pay, and low pay leads to job insecurity and growing levels of household debt. Just like before the crash, Britain is now facing a credit bubble based on an unsustainable housing market. The huge increase of people in work forced to claim benefits to top up poverty pay illustrates just has shaky our economy has become.

You can’t build sustainable economic growth on poverty pay, household debt, low skills, and job insecurity. A failure to invest might create a short-term boost in profits but in the long term it leads to decline. We’re in a race to the bottom and the Tories’ proposals will make things worse not better.

This Government makes a huge mistake by thinking that you can only be pro-business by being anti-worker. Labour, in the past, has tried to sound pro-worker by letting ourselves be caricatured as anti-business. Our economy can only succeed if we are pro-business AND pro-worker.

Instead of a fresh round of Tory anti-union laws that leave people even more insecure, Labour should fight to give workers a more direct incentive to share in the fortunes of their employer.

Workers on company boards, and the right to shares in their employer’s business, would both encourage the workforce to share in the sacrifices necessary to boost productivity. But a bigger voice for workers would also allow companies to benefit from the insights and expertise of their own employees. People on the frontline often see growing problems and new opportunities for the business before managers do. Tax relief for share ownership schemes could save much more through increasing productivity than it costs to implement.

One of the big causes of the crash was a lack of accountability in the banks which led to cheating and uncontrolled risk. Improving accountability within firms can help to reduce this risk in our economy. There is no statutory right to request employee ownership when a company is being dissolved or sold, and we lag behind the rest of the EU in legislating for workers on boards.

None of this is red tape, it’s about giving more people working for a business a stake in that business – skin in the game that gives them a reason to buy into the tough decisions necessary to restore business success and improve productivity. That, rather than bashing unions, is the way to encourage employees to share the risks so they can share in the success.

Britain’s workforce isn’t a problem to be contained it’s a resource to be harnessed.

Britain can’t build sustainable economic growth on low productivity, low skills, low pay and low investment. We need the precise opposite to give our people the opportunity to make the most of globalisation and the digital economy. Labour needs to make the case for a new approach that is pro-business by being pro-worker.

Steve Reed is the MP for Croydon North and he is Shadow Minister for Local Government