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Businesses fail to invest in people and technology

Businesses are not investing in the staff, technology and equipment needed to boost productivity, says a new report by the Chartered Institute of Personnel and Development (CIPD).

The survey of 1,000 businesses found that despite 2 years of improving economic growth, 29% are failing to get the right balance between investing in staff and investing in technology.

When asked about their future plans to boost productivity:

  • 34% do not see the need for future investments
  • 55% expect to produce more goods and services in the next 12 months, while 8% expect to produce less
  • 33% will soon be able to make investments in staff and equipment that they have not been able to make in recent years
  • 16% do not have the finances needed to invest and 4% think they lack the skills or ambition needed to boost productivity.

The report groups businesses into 5 groups based on their experience over the last 2 years:

  • balanced investors (25%) who have continued to invest and increased their productivity over the last 2 years
  • survivors (21%) who have not been able to invest or make major improvements
  • cost-cutters (19%) who maintained a stable level of investment by cutting costs elsewhere in the business 
  • people-focused investors (16%) who have continued to invest in their staff but need to put more money into equipment
  • capital-focused investors (13%) who have invested in technology but not in staff.

Mark Beatson, chief economist at the CIPD, said:

"The recession has cast a long shadow over many British businesses and residual fears about a future downturn have left many organisations with a ‘glass half empty' mindset which has held them back from investing despite improved economic conditions."

Peter Cheese, chief executive of the CIPD, said:

"The national living wage could ‘pay its own way' if employers increase the productivity of their workers. However, if businesses fail to provide better training and redesign jobs and adopt better systems and equipment, so they add more value per hour, it's likely that the UK's productivity problems will persist and companies will struggle to deliver improved wages without making job cuts."

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