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Postscript: Productivity gains? Invest in literacy

The grim warnings roll off the tongues of central bankers and economic gurus: the US economy is in for a painfully long period of slow economic growth.


December 10, 2010
by Todd Hirsch

The grim warnings roll off the tongues of central bankers and economic gurus: the US economy is in for a painfully long period of slow economic growth. Unlike other post-recession periods, this one is not reacting to the traditional remedies such as lowering interest rates (they’re already as low as they can go), quantitative easing (no one wants to spend the money), or even massive government stimulus spending. The Canadian economy, of course, will sustain collateral damage if the US continues to languish.

With the usual economic tools failing to get consumers spending again, why not focus on businesses? How can companies boost output, reduce error rates, increase team performance, improve labour relations, cut staff turnover, and increase health and safety?

There is an app for that: it’s called workplace literacy.

According to the leading research on the subject, four in 10 Canadian workers lack the necessary level of literacy to understand a safety manual, a set of instructions on a new piece of equipment, or a new piece of computer software necessary for them to accomplish their work.

One recent report shows that improving literacy scores by 1% would increase labour productivity by 2.5%. Productivity is something the Bank of Canada and other economists have been tsk-tsking Canadian businesses for years. Abysmally low levels of productivity in this country put us at risk of falling behind the rest of the world, and our standard of living hangs in the balance.

Literacy stimulates economic activity in other ways, too. With it comes enhanced creativity and innovation, two things rather useful when encountering problems and challenges on the job. In the best-case scenario, creativity will stimulate better processes, improved design, and even brand new inventions.

The big problem with literacy is that few employers identify it as a problem. Poor literacy is often confused with being unable to read. It’s really about being able to comprehend and synthesize more complex text, and being capable of applying those ideas to everyday life and work.

Yet rather than ramping up literacy and skills training during an economic soft patch, many employers actually cut their investments in this area. The perception is that it all costs too much money and takes up too much time.

Literacy a must-have
By viewing literacy development as an unnecessary luxury that can be chopped when money is scarce, employers are missing the point entirely. It’s not a nice-to-have; it’s a must-have – at least for companies that are serious about boosting productivity, output, and safety. Investing in new equipment and machinery are typically the prescribed solutions to the productivity issue, but what good are these new pieces of equipment if workers lack the necessary literacy skills to put them to proper use?

Investing in literacy requires proper action on the part of the employer to identify how a worker would like to progress in his or her job, and then to make sure the right skills training is provided. In the process, literacy skills are developed.

The most common excuse employers give for not investing in literacy programs is the fear of eventually losing the newly trained and upgraded workers to competitors. “Why should I put money into improving her literacy skills?” an employer may argue. “What if she leaves?”

The better question to ask is: What if she stays?

As the modern saying goes, there’s an app for everything. Investing in workplace literacy may not solve the US credit crisis or the public debt problem, but it will improve labour productivity, workplace safety and employee engagement. In this sluggish economy, that may be the most useful app of all.

Todd Hirsch is senior economist with ATB Financial in Edmonton. E-mail todd.hirsch@troymedia.com.

Click here to go back to the Manufacturing Leadership report on productivity.