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UK innovation in service caught snoozing, reports ONS

Last week the Office of National Statistics released its most recent estimates on International Comparisons of Productivity. The report contained annual estimates of labour productivity for the G7 developed countries (Canada, France, Germany, Italy, Japan, UK and USA) up to 2011 and showed that the UK is lagging behind. So what does this mean for service in the UK? Could our low productivity be having an effect on customer service and the service organisations’ pursuit of service excellence?

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The headline finding from the report was that output per hour in the UK was 16 percentage points below the average for the rest of the major industrialised economies in 2011, making it the widest productivity gap since 1993. On an output per worker basis, UK productivity was 21 percentage points lower than the rest of the G7 in 2011.

Stephanie Flanders, the BBC’s economics editor, suggested that these findings may not be as bad as they first seem commenting that “although the average British worker is nearly 40% less productive than their US counterpart, in the short-term having more people in jobs could be better for the UK economy as it preserves people’s skill levels and experience, ready to respond to the upturn when it comes.”

However, Kate Barker, former member of the Bank of England's Monetary Policy Committee, singled out the service sector as the one that has, “seen the biggest loss of innovation during this period.” We reported on this in our blog post last year in which Geoff Mulgan, Chief Executive, NESTA an independent charity dedicated to business innovation, suggested that British business “prioritised cash and concrete over investment in future technologies and services, a potentially disastrous decision that now needs to be put right.”

Innovation might not be top of the priority list for the service industry right now but in the longer-term, investment in technologies to improve service levels will pay dividends. Our own research findings show that 53% of consumers are willing to pay a premium for products or services where they believe they are likely to receive good service. This link between investment in innovation of products and services and a company’s revenues and profit could therefore result in the sustainable growth and employment that the service industry is looking to achieve.

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