Aneditorial featured in theFinancial Timeswas less than positive about Andy Burnham’s first week as prime minister. Despite uplifting data over the last fortnight on UK GDP growth, inflation, retail spending and business sentiment, the article spoke of a “Burnham bounce” resulting from his self-proclaimed “business-friendly socialism”.
It said that if he wanted to take the country forward, then he must lean on “business-friendly elements” and not treat it as a “bottomless pit for tax revenues”. It also warned that the UK needed “a credible plan” for economic growth, with reduced public spending and red tape and to “avoid heaping yet more costs on to companies and investors”.
In summary, the UK needs “a plan that revives animal spirits in the private sector”.
Caution and cost control
Surveying the current UK landscape for people management might lead you to conclude that there is far more culling and cost cutting underway than planning and growing. ‘UK employers taking cautious approach to growth’ wasPeople Management’ssummary of the latestquarterly CIPDLabour Market Outlook. Cost cutting was the top priority for 58 per cent of organisations, ahead of productivity growth (44 per cent).
Andy Burnham pledged to“bring back hope”on his first day in office. Yet UK unemployment was up again in July’sONS data, with one in eight employers making redundancies in the past year and more than a million young people NEETS. Vacancies saw their 50th month of successive decline.
ONS regular earnings datawas also down to its lowest rate in five years, at 2.9 per cent in the private sector. A parallelWork Foundation surveywarned of the human impact of its finding that only one in five employers are planning pay rises above inflation this year.
Far from reviving long-term productivity growth through job augmentation and investments in reskilling, recent surveys of AI highlight a ‘top down’ approach commonly focused on short-term headcount and cost reduction. Or, in other words, “replacing lower-value human capital with financial and investment capital” in the widely criticised words ofStandard Chartered chief executive Bill Winterswhen he explained to investors the 8,000 job losses planned through automation at the bank.
The CIPD’s senior skills policy adviser, Lizzie Crowley, warns UK employers to reverse the continued decline in their training investments. TheLearning and Work Institutefound that this has fallen by 13 per cent over the past two years, representing half the spend of US and European competitors. In the CIPD’slatest report on adult skills, Crowley said: “The reskilling imperative is not just an economic necessity – it’s a social contract… we urgently need to usher in a new era of reskilling to help people develop into new roles and sectors and revive UK productivity.”
Engagement and productivity
So how do we reverse the business gloom, the caution and tight-fisted approach to business and training investment, and get UK productivity really flying again? IES and IPA members got a detailed data and evidence-backed answer at ourrecent online meetingaddressed by the CIPD’s senior research manager, Sarah Pass, who leads the long-established Engage for Success (EfS) employee research.
The 2026 findings are summarised in theProductivity starts with peoplereport. It includes a review of academic and practitioner research that identifies eight key productivity drivers closely correlated with individual and organisational performance. These include:
- Process
- Efficiency
- Collaboration
- Skills investment
- Fair expectations
The findings show strong links between these productivity drivers and employee engagement. Average employee engagement levels are 82 per cent where all eight productivity drivers are present. When these key conditions are missing – employees aren’t involved or trained or managed well, they have low autonomy, etc – engagement levels are down at 64 per cent.
Higher engagement was associated with stronger self-rated individual performance and more positive perceptions of organisational performance. As the report concludes: “This strengthens the central argument that organisations treating people issues as a strategic priority are better positioned to deliver sustainable high performance.”
Engagement and the cost of control
Open and engaging management seems key to realising these gains. Where managers take a collaborative, participative approach, organisations report stronger performance and employee engagement levels averaging 79 per cent. Under tight cost and command-and-control management, average engagement is 50 per cent – employees report higher job stress, greater presenteeism and employee silence.
The EfS report concludes that “this is not simply about leadership preference; it is about organisational effectiveness. In organisations under (cost) control-oriented management the organisational performance index is at 49 per cent. This contrasts with organisations under collaborative management showing 63 per cent.”
Duncan Brown is principal associate at the Institute for Employment Studies
