Offering staff members more public holidays and increasing wages could raise productivity and lead to a boost in the British Economy, a new report has found.
According to a recent report by the New Economics Foundation driving up the spending power of consumers would give businesses a greater incentive to raise their productivity, as they would have a greater confidence in their products or services selling to consumers.
The idea that giving workers more cash to spend comes as the UK faces more struggles to improve the efficiency of the British economy as Brexit looms closer.
The UK previously improved its productivity levels by two per cent year-over-year across the last four decades before the 2008 financial crisis hit.
However, since then productivity growth has dropped to about 0.7% a year.
Meanwhile, economists fear that Britain’s departure from the EU could heighten this further, as firms have started to freeze their investment plans due to political uncertainty.
To help improve the UK’s productivity record, the New Economics Foundation suggests that the government drives up the minimum wage faster than already planned and increases spending on public services by £32billion a year by the mid-2020s.
In addition, workers should receive a national weekly allowance worth £2,500 a year instead of the tax-free personal allowances, while the government should also create a new body to provide guidance on increasing the number of public holidays. Currently, the UK has just eight bank holidays throughout the year.
British workers have the fewest paid days off in Europe, with the UK minimum usually starting from 28 days, while in the EU it ranges from 30 to 40 days.
Alfie Stirling, Head of Economics at the foundation, added: “Raising demand by putting more cash in the pockets of the UK’s poorest workers, while giving people more paid time off from work to spend it, should now be part of a radical mix of options for any government that is serious about increasing productivity in a way that works for people and society.”