Academic journal article National Institute Economic Review

Productivity, Product Quality and Workforce Skills: Food Processing in Four European Countries

Academic journal article National Institute Economic Review

Productivity, Product Quality and Workforce Skills: Food Processing in Four European Countries

Article excerpt

'borrowing' from other countries. Indeed, all three of the Continental countries examined here are presently undertaking reforms of their own in an effort to improve the workings of their respective vocational education and training systems. Our comparisons suggest that, in order to compete successfully with other advanced industrial nations, Britain needs a coherent set of policies which build on existing institutional structures, for instance, by raising average levels of attainment in core subjects in secondary schools, expanding the provision of full-time and part-time vocational education courses to recognised standards and strengthening the links between vocational colleges and employment-based training schemes.

Appendix A. Estimates of relative 'quality-adjusted' productivity levels 1. Introduction

During most of the 1980s Britain's productivity performance improved sharply in relation to its leading Continental competitors but the differentials remain substantial: recent estimates based on Production Census data show gaps in manufacturing output per person-hour ranging from some 20 to 40 per cent between Britain and Germany, France and the Netherlands (van Ark, 1990a, 1990b; O'Mahony, 1992). It is therefore of continuing interest to examine the reasons for this shortfall in British productivity levels and to assess the implications for British manufacturers' ability to respond quickly and effectively to competitive pressures in international product markets.

In previous studies covering a range of industries, National Institute researchers have compared productivity levels and the quality and utilisation of physical and human capital inputs in matched samples of manufacturing plants in Britain and Germany, and Britain and the Netherlands. In all cases these bilateral comparisons pointed to important links between relative productivity performance and workforce qualification and skill levels (Daly, Hitchens, Wagner, 1985; Steedman and Wagner, 1987, 1989; Mason, Prais, van Ark, 1992).

The present study reports on a detailed comparison of productivity, machinery and skills in matched samples of plants in a single industry--food processing--in four countries: Britain, Germany, the Netherlands and France. (Unless otherwise stated, the term 'Germany' refers throughout to the former Federal Republic.) By extending the range of inter-country variation in this way, it was hoped to deepen our understanding of the effects on relative productivity performance of different national systems of human capital formation: in relation to Britain all three Continental countries are distinguished by higher proportions of vocationally-qualified personnel in the workforce; however, in contrast to the well known 'Dual System' of apprenticeship training in Germany, initial training in the Netherlands and France is largely based on full-time vocational schooling.

Food processing is a prominent example of 'light' manufacturing in which the productivity gap between Britain and most other leading industrialised nations has historically been found to be low relative to other branches of manufacturing (Prais, 1981; Broadberry and Crafts, 1990; Broadberry and Fremdling, 1990). It has therefore been regarded as an industry in which Britain has a comparative advantage or at least in which its comparative disadvantage is relatively small. However, plant-sizes in British food processing are typically larger than in most other industrial nations (even including the United States), and questions have consequently been raised as to why scale-economies have not produced still greater benefits in respect of British productivity performance (Prais, 1981; NEDO, 1982; Maunder, 1988).

In the course of earlier comparative studies, suggestions have accumulated that British manufacturing's 'productivity problem' relative to other advanced industrial nations might consist not just of lower (physical) quantities produced per person employed but also of lower average product quality levels. …

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