The UK suffers from poor productivity compared to many other countries in Europe. According to World Population Review, the UK’s productivity stands $51.38 GDP (PPP) per hour. Compared to similar economies, Germany’s productivity is $66.71 (30% higher), and France’s is $62.79 (22% higher). The UK government has argued that the reason for low productivity is the UK has become ‘drunk on cheap labour’. Statistics | Eurostat (europa.eu)
As the immediate effects of the Covid-19 pandemic recede, shortages of labour have emerged, particularly in supply chains. To attract drivers, employers are offering signing on bonuses and higher salaries. While these incentives may bring some long-haul drivers out of retirement and attract others to the industry, it will take time to train and test sufficient in number to alleviate the long-haulage driver shortage to acceptable levels.
For local delivery drivers, the barriers to entry are negligible in comparison and increasing compensation packages to attract drivers are more likely to have a faster positive effect. However, not surprisingly, many argue that increasing salaries for delivery drivers will increase costs, without the ability to increase productivity.
I would argue that the increase in salaries for drivers does indeed give employers the incentive to increase efficiency and therefore productivity, particularly in online shopping. As an example, Amazon’s model enables me as a customer to buy a tube of toothpaste that costs £2, which will be delivered to my home within 24 hours. Extrapolating from my household of 4 consumers and the number of little brown boxes arriving at home each week, millions of customers make many similar small single purchases at their PCs/laptops every week. However, Amazon’s model only works based on the affordability of having thousands of white vans driven by relatively low paid drivers. While convenient for the consumer, it is a business practice that is both unproductive and not environmentally friendly.
Let us now say, that higher driver salaries begin to make this model unworkable or at least less profitable. Amazon might put up prices to compensate or it could consider a minimum order quantity for a delivery, say £20. As a customer, I could choose to walk to the nearest shop to make the purchase, or I might think about other items that I will need, if not immediately, but soon, perhaps some shampoo, shower gel or a box of staples. By consolidating my purchases and those of other customers, this will lead to less deliveries requiring fewer drivers, fewer polluting white vans, lowering traffic congestion, and resulting in higher productivity.
To learn more about how Heron International could help you improve your productivity please contact us
