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Poor productivity cost the UK £40bn last year

17 October 2019

Sage launches its second annual Productivity Tracker, which investigates the amount of time lost to administrative tasks. The study reveals that the ‘Productivity Puzzle’ is far from solved – in fact it has worsened.

In tandem, Sage is also announcing its new Sage International Trade Hub to support businesses in exporting and importing, making foreign investments, managing complex supply chains, and hiring from abroad.

In the UK, small and medium businesses are estimated to have lost 5.6% of business time per year to admin. That equates to £40 billion of lost economic value in the last 12 months in the UK, an increase of 0.9% compared to the year before. In the UK, businesses say that the administrative tasks which take up the most time include accountancy, generating invoices and human resources.

The Productivity Tracker surveys small and medium sized businesses across 12 countries, uncovering the percentage of time spent during an average working week on unproductive administrative tasks; time that could be reduced by using technology and digital tools. 

The admin burden continues to hold back the productivity of small and medium businesses across the world:

• Research reveals that the global productivity deficit – the economic value lost by business to administrative tasks – rose 2.6% last year, to £446 billion
• Across the 12 countries surveyed by YouGov, the average time lost to admin, which includes tasks such as chasing late payments, processing invoices and HR tasks, is 5.2%.
• The analysis reveals that Spain reported the highest percentage of business working hours spent on these tasks, at 10.5%.
• The nation reporting the lowest amount of time dedicated to these tasks is Canada, where only 1.7% of business’ time is allocated to tasks per year. 

This data is contrasted by Sage research which shows that UK businesses are bullish about trade prospects for the coming year. Also, in partnership with YouGov, Sage surveyed 3,000 businesses of all sizes across 12 countries about their outlook on trade, and half of businesses in the UK (49%) expect that the amount of trade that they carry out with customers and suppliers will increase over the next year, while 23% expect the amount of trade to fall. With attitudes towards trade positive – despite economic and political uncertainty – it is clear that businesses are not adopting the tools needed to streamline unproductive activity and reduce the amount of time spent on admin.

Commenting on Sage’s productivity data, Jonathan Brenton, Head of Trade Policy at CBI said: “Productivity is the biggest long-term challenge facing the UK economy. We know that companies who export tend to be more productive so encouraging more UK companies to trade globally could be one part of solving the UK’s productivity puzzle. The UK is home to many great exporters, but the percentage of British companies who export is lower than in Spain or Germany, so it is fantastic to see Sage supporting small businesses with the advice and resources available at their International Trade Hub.”

Addressing the need for better alignment between policy and industry, Ed Vaizey MP said: “The UK has reached an important moment where digital – be it skills or tools – must be embraced by businesses in order to bring the next wave of economic growth. This means government and industry working together to better to understand the UK’s economy. With 600,000 businesses using Sage to run their business the UK – we need to see policymakers making better use of companies like Sage, that can share important trends and insights on business activity in the UK and create a roadmap for a more productive future.”

Sabby Gill, MD UK and Ireland at Sage, said: “The ‘Productivity Puzzle’ is far from solved. Globally, on average, productivity modestly improved yet global economic growth outstripped productivity gains, creating this international productivity deficit. As small businesses scale up, hire more staff and contribute further to the economy, even greater value can be unlocked by digitising business admin.

“In 2019 it is unacceptable that the growth in small and medium sized businesses, who make up 60% of all private sector employment in the UK, is still hindered by access to digital tools and digital skills. With less than a third of those small businesses surveyed in the UK currently using cloud technology for administrative tasks, compared to 1 in 2 large businesses – there is a clear gap that must be closed, so that the benefits can be felt by all.”


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