IoD Senior Economist Tej Parikh Believes Agility and Productivity are the Keys to Unlocking the Potential of the ‘Enterprising East’
IoD Senior Economist Tej Parikh provided business leaders with results of recent 2019 IoD Policy Voice
Surveys and an update on the current state of the UK economy during his visit to the IoD East of England Regional Hub, The Bradfield Centre on 20 March 2019.
According to IoD Policy Voice
surveys, investment and employment expectations amongst IoD members are completely subdued, with zero per cent of members planning to make any significant investments in the next year.
In addition, figures show that wage growth is plateauing as SMEs need to limit their margins due to other high costs which are predicted as a result of the possible Brexit outcome. The result is likely to bring new regulations and an increase in the national wage of living.
Despite this, wages continue to remain relatively high, as companies feel the pressure to compete with others to attract new workers. Obviously this is an even bigger struggle for small companies which are competing against larger organisations to keep workers because they cannot afford to pay such high salaries.
IoD Senior Economist Tej Parikh recognises the East of England as a region which “already shows a lot of prosperity, being a diverse region with knowledge- intensive industries”. This can be seen by the numerous science, business and research parks in cities such as Cambridge, Norwich and Ipswich.
However, in order to keep these booming, the East of England requires not only the investment and high wages, but also talented, skilled workers.
The IoD Policy Voice Surveys revealed that our members’ top priorities for local industrial strategy are improvements in existing infrastructure and having a skills strategy.
Business leaders know that skills sets are in shortage as their companies struggle to find the right people with the correct skills and attitude for work. The IoD East has recently held a number of debates
across the region where panelists have discussed the mismatch between education offerings and what companies need.
The general consensus was that there needs to be more communication between companies and educational institutions in order to ensure that students are acquiring the necessary practical skills to move into organisations.
The UK produces around 600 thousand new start-ups every year, which is clearly very impressive. At regional level, we still pride ourselves in being the “Enterprising East”, which is demonstrated by the 50 per cent increase in tech start-ups in 2018, showing strong resilience and creativity in the region. However, our challenge is “growing them to becoming the next Facebooks and Amazons”, Tej Parikh reports.
Not having the skills to manage people and processes to turn those start-ups into big organisations is definitely a serious issue facing companies of all sizes, but our ability to market ourselves is also a huge challenge. There is not only a disconnect between schools and businesses, but also between government and businesses.
Since the financial crisis, levels of productivity in the UK have also decreased. This is partly due to the legacy of underinvestment of the private and public sector and a very heavy focus on the financial services instead of diversifying into other sectors such as digital and technology. It may also be a result of not all companies benefiting from globalisation.
There is no surprise that the East of England has lower productivity levels compared to more cosmopolitan areas such as London. Being our administrative and financial capital, London has drained a lot from the rest of the country; hence the significantly higher productivity in the capital compared to everywhere else.
It is therefore more important than ever that local businesses communicate with the government to make themselves known on both a national level and an international level, so that people do not only look towards London for a bright and prosperous future but also to the ‘Reviving Regions’.
In order for us to find the solution to these problems, Tej Parikh suggests that we first “move away from a short term focus on GDP numbers and think about long term structural growth”, with “a stronger focus on agility and productivity”.
The current state of the economy is difficult to predict and control, so for now what we should be doing as business leaders is “checking the challenges and opportunities out there and starting to build on what we already have”, Tej says.
It is about converting start-ups into scale ups and attracting people to the region by sharing the vision that there is potential in the economy, despite the political uncertainty that lies ahead.
For the time being we do not expect business activity to be very strong, but we should at least show resilience over the next few years by working together and communicating to show what the ‘Enterprising East’ has to offer.
That is why the IoD strongly encourages its members to sign up to the IoD Policy Voice
, which surveys our business leaders to ensure that their voice is heard and considered when government is making decisions that might affect the UK economy.
Finally, in these times of economic and political instability and uncertainty, directors need all the business support that they can get. That is where the IoD comes in; a strong business community which you can rely on.
They can also take advantage of our extensive events programme by connecting and establishing meaningful business relationships with other like-minded leaders with a similar vision of what the future could mean for UK business.
For more information about the business support that the IoD can offer, visit our Member Services Page.
For further information and advice on Business Planning for Brexit, visit our Brexit Hub.
To find out more about events taking place across the East of England, visit our IoD East events page.