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Lemons help Pizza Express tackle the 'productivity puzzle'

lemons
Image caption By changing who chops its lemons, Pizza Express says it has made "significant savings"

They say the best ideas are the simplest ones. At Pizza Express, the restaurant chain, it was all about the lemons. Who should chop them?

It used to be the waiter's job, the first thing he or she did when they arrived for work in the morning.

That way all the lemons were sliced and ready to drop into orders of water or cola for the rest of the day.

But then one of the pizza chefs said it just didn't make any sense. The chefs spent all morning chopping and dicing the toppings for pizzas.

Waiters, by contrast, had to take a break from their usual tasks, wash their hands, clear a space and then clean up after themselves.

So it was decided - henceforth, across Pizza Express' almost 500 outlets globally, chefs would be in charge of lemons.

"Just by changing who chops the lemons, we were able to make a significant saving in hours which translates into a significant financial saving," says Richard Hodgson, Pizza Express' chief executive.

Productivity puzzle

It's precisely the sort of story that goes to the heart of the whole productivity question that so interests George Osborne, the British chancellor.

And the publication of the plan to "make Britain work better" by the Business Secretary, Sajid Javid, is part of the push to improve Britain's productivity.

Image copyright Getty Images
Image caption During the election campaign George Osborne tried his hand at pizza-making, but not at chopping any lemons

Mr Osborne wants to do something about Britain's woeful record on productivity. Statistics show UK workers produce less per hour than workers in many other industrialised economies.

To be fair, productivity is a bit of a problem everywhere at the moment, not just in the UK. But it matters because in the past rising productivity has been an important source of economic growth and improving living standards for all of us.

True, the UK the economy appears to be ticking over nicely, much better than many of its European neighbours; there's growth, unemployment is down and the number of jobs is up.

All of which has left economists scratching their heads about productivity - what's been dubbed the "productivity puzzle". Why isn't it improving with the rest of the economy?

No-one quite understands what's going on but everyone has an opinion.

Questioning the figures

A popular explanation is that the statistics are missing something.

"For decades economists have been trying to work out the right way of reflecting the fact that stuff is getting better with technology," explains Stian Westlake, executive director of policy and research at Nesta, the UK's foundation for innovation.

Some people are asking whether "we are under-measuring output and therefore assuming that productivity is lower than it really is because we can't properly adjust for how much better certain things are getting".

Image caption While the UK economy is doing better than in many other European countries, economists are puzzled that productivity remains poor

A recent research note at Goldman Sachs about US productivity levels made that very point.

"How much better is Grand Theft Auto V than Grand Theft Auto IV?" the note asked. Both computer games retailed at the same price when they were released five years apart, but the newer game is a lot more sophisticated than the older one. Statistics struggle to reflect that sort of change.

So is it possible that some aspects of productivity are just not measurable? A lot of intangible investments go into an economy; things like research and development, marketing, and branding. They are part and parcel of running a business but they don't come off a factory line which makes them difficult to quantify.

"It's certain that one could measure them better, but it's difficult to say that one could ever measure them perfectly," Mr Westlake says.

Wrong kind of jobs

Others argue that Britain's low productivity is explained by the kinds of jobs the economy is creating.

"They are jobs that organisations are unable to automate," says Prof Peter Fleming at Cass Business School of City University London. Jobs like flipping burgers and driving buses which though necessary are low skilled and low paid and don't add much to the overall economic output.

But Prof Fleming also sees other factors at play. He says Britain's workforce has been "neglected in terms of pay and conditions."

Wages have stagnated for the past few decades and an increasing number of people are working on "zero hour contracts" where staff is hired with no guarantee of work and uncertain pay. Prof Fleming argues that this has demoralised the workforce, depriving them of incentives to work better or harder.

Image copyright Pizza Express
Image caption When it comes to productivity, making sure your staff have the right training is key, says Pizza Express boss Richard Hodgson

"It's a very difficult time to be an average worker," he says. In the UK "we have seen the proliferation of any type of work - work that doesn't add anything to the economy - just to get people off the unemployment list."

So does that mean there is often a trade-off between productivity and the number of people in work?

According to the UK's Office for National Statistics, the latest international comparisons show that UK workers produced on average between 27% and 31% less per hour than workers France and Germany in 2013.

So French and German workers are more productive by a stretch. But France also has a higher unemployment level; 9.9% in 2014 compared with 6.1% in the UK, according to the OECD.

Prof Fleming says part of the answer lies with companies, which he claims could make a big difference by investing more in training their staff.

Every pizza counts

And that brings us back to Richard Hodgson, chief executive at Pizza Express.

It takes 12 weeks of intensive training to become a Pizza Express chef - a pizzaiolo - and there are 50-odd pizzas on the restaurant chain's menu.

When it comes to productivity, Mr Hodgson says: "Making sure that every single pizzaiolo knows how to make each individual pizza is very, very important."

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