SMEs starting to close the chronic output gap

TWO-thirds of small and medium sized (SME) businesses have taken measures to ratchet up productivity over the past 12 months, a new report out yesterday said.

Patrick Reeve of Albion Ventures says boosted output should increase real wages. Picture: John Devlin

And half of SMEs say they expect output per worker to grow over the next two years, according to the study by Albion Ventures, a major UK venture capital provider.

“Following several years of a widening productivity gap between the UK and other economies (it) suggests this trend may start to reverse as only 3 per cent predict their output will decline further by 2017, while 36 per cent say it will remain the same,” the report says.

It says productivity improvements have been pursued most aggressively by medium sized firms, 86 per cent adopting measures to boost output compared to 56 per cent of small firms.

Patrick Reeve, managing partner at Albion Ventures, says boosted output should increase real wages as “the majority of the UK workforce is employed by SMEs”.