The Lowdown Hub

The missing piece: how 5G can help Britain solve its productivity puzzle

In a vote of confidence for flexible working, UK efficiency has actually risen since Covid hit – so having a world-class internet network is now more vital than ever. Richard Fernsby crunches the numbers

Illustration: Selman Hosgor/Studio PI for Bridge Studio

“If the UK wants to be a world leader in innovation, to close the divide between the north and the south and improve its productivity, the country has got to have world-class infrastructure,” says Victor Zhang, vice-president of Huawei.

“Mobile networks are a key part of that – and the next few years will be hugely important for the rollout of 5G.” Any country that falls behind will find it difficult to catch up, he adds. The rollout comes at an interesting time for the UK, especially in terms of productivity.

According to the Office for National Statistics, UK labour productivity (in terms of GDP per hour worked) barely changed between the start of the recession in 2008 and the start of the pandemic in 2020. By contrast, the average growth rate between 1970 and 2007 was 2.4 per cent a year.

Moreover, the UK has long had poor productivity compared to other western European economies, although, interestingly, it is more productive than Japan, where long hours are the norm. This is often known as the “productivity puzzle”. This was one of the many issues examined at the recent Times CEO Summit, which Huawei sponsored. It is one of the biggest challenges facing the UK.

However, something very interesting happened during the pandemic. At first, as might be expected, productivity dipped sharply. But then it shot up at a rate far faster than anything seen in the past few decades. It then fell back, but it’s still above its trend rate. This would seem to suggest that the way we worked during the pandemic actually made us more productive – and it hints that these changes could go some way towards solving the UK’s productivity puzzle. Many people believe their productivity has improved since they started working from home Recent surveys by the Chartered Institute of Personnel and Development (CIPD) lend weight to this idea. In June 2020, 28 per cent of employers told the CIPD they believed remote working improved productivity. In the latest update, using data collected between December 2020 and January 2021, 33 per cent said that productivity had improved. Moreover, the percentage reporting that it had declined fell – this means that, overall, 71 per cent of employers think that home working either makes no difference or boosts productivity.

Jon Boys, a labour market economist at the CIPD, says: “The message we’re hearing at the moment, particularly via self-reports from firms and employees, is very positive. The majority of people believe their productivity has improved. It seems fairly unambiguous that flexible working has had a positive influence on productivity.”

He adds that much of this is probably down to reduced commuting, which means that people have both more time to work and more time with their families or to themselves. It is also notable that the areas of the country which have the longest commutes (the east and southeast of the UK where many people commute into London) have had the highest take-up of flexible working arrangements. And although it is likely that many people will return to the office in some way, it’s also highly likely that more flexible working patterns will be here to stay.

A lot of tech-enabled ways of working have become the default and are much more inclusive. We’ve learnt about how tech can facilitate things

Of course, technology, particularly in the form of videoconferencing and collaborative working tools like Slack and smartphones, has enabled much of this shift. Had the pandemic happened ten years ago, home working would have been much harder – and had it taken place at the turn of the century, it would have been impossible for most people.

But staying ahead of the flexible working curve will mean keeping up with technology. “4G is good enough for a lot of working from home,” says Zhang. “But 5G is a low-latency network.” This means a much greater capacity; it means improved response times – and videoconferencing will become much more stable. He adds: “5G is also key to the technologies of the future such as AI. To fully leverage these will require transmitting vastly more data than we do at the moment – 5G networks can support this.”

Another point here is that it often takes us a surprisingly long time to fully utilise new technologies. The early pandemic was a crash course in remote productivity and technology. “I do think that a lot of tech-enabled ways of working have become the default now and are much more inclusive,” says Boys. “We’ve learnt a lot about how tech can facilitate things.” He adds that ubiquitous 5G will probably be another game-changer in terms of remote working.

Of course, it is worth remembering here that a lot of people still need to be at a specific location to do their jobs – and it is also true that flexible working in the UK is disproportionately available to the professional classes and those in the more affluent and productive parts of the country. Care will have to be taken to ensure that any changes do not exacerbate divides.

“Being a leader in innovation and technology is one of the keys to solving the productivity puzzle,” says Zhang. “It’s not the only key – but it’s a very important one.”