The importance of labour productivity and how fleet technology can increase it

The importance of labour productivity and how fleet technology can increase it

Before we explain how to increase labour productivity by using fleet technology, we first need to delve into the present situation of labour productivity and find out why intervention is needed in the first place. Here is the situation in Europe and more specifically in Ireland at the moment:

Current situation of labour productivity

Since the mid-1990s there has been a slowdown in growth across Europe, which is believed to be caused by poor productivity. In this same decade, labour productivity in Europe even fell behind that of the United States, reversing a pattern of convergence that had previously been seen between both economies. 

While the US was able to restore productivity growth, Europe, on the other hand, failed to take advantage of many opportunities, such as the information and communication technology (ICT) revolution, which would have led to increased productivity. This resulted in a considerable labour productivity gap forming between the US and the EU.

In the 2000s, the diffusion of digital technologies escalated and was expected to result in a new wave of productivity growth, like similar ones in the past, e.g. as a result of electrification (from the mid-1880s) and, to a smaller extent, ICT investments (in the 1990s). However, this is not what happened, which has left many people still wondering whether the effects of these new technologies will be obvious later, which will require measurement.

Labour productivity prior to COVID-19

Before the COVID-19 crisis came about, a significant amount of attention was being focused on the decreasing long-term productivity being reported across Europe, the US and Australia. It was known as the productivity paradox because the productivity slowdown took place at a time of notable technological change. The attention should once again be focused on productivity and gain more importance once recovery from the COVID-19 pandemic fully commences.

The 2022 outlook for labour productivity 

In many countries, a lot of companies with low productivity (composed mostly of small companies) co-exists with large companies that are, on the other hand, very productive and even compete with international businesses. Since large companies find it easier to exploit increasing returns to scale, productivity tends to increase the bigger the company.

Smaller companies need not worry as many are able to trigger productivity growth by implementing new technologies. The pandemic led many companies to adopt digital technologies as shown by the evidence from multiple business surveys conducted worldwide during 2020. The results revealed that most companies, including smaller ones, increased their use of digital technologies during the COVID-19 crisis. This can also be seen in the Fleet Technology Trends Report Europe 2022.

Nevertheless, among smaller companies there is often a concern about costs and lack of skills and awareness of digital tools, which prevents them from investing in digital technologies. 

A solution to this could be to diffuse digital technologies across companies to prevent the productivity gap within economies increasing even further and to ensure that a rebound of aggregate productivity is maintained after the pandemic.

How to help improve labour productivity with fleet technology

GPS fleet tracking systems can help improve your team’s labour productivity through accurate time management by:

• Scheduling jobs in an efficient order to fit more customer appointments into the working day.
• Creating optimised routes and updating them quickly for ever-changing traffic conditions.
• Knowing the location of each vehicle in near real-time in order to send the nearest one to carry out a service.
• Reducing time-wasting and unauthorised use.

And, according to the Fleet Technology Trends Report Europe 2022, 57 % of businesses in Ireland have improved their productivity since implementing a fleet tracking solution.

How improving labour productivity can benefit the customer experience

Customers are imperative to any business and keeping them happy is more important than ever especially in this modern-age of on-demand service. One way to improve your customer service is to implement fleet technology. This enables you to:

• Respond faster: Use near real-time location data to respond quicker and more accurately to customer queries and to proactively manage delays.
• Keep customers in the know: Provide your customers with accurate ETAs and allow them to track drivers to their doorsteps in near real-time.

By improving customer service, you can quickly make a difference that helps with customer retention and boosts customer satisfaction. 

In fact, 50 % of businesses in Ireland reported improved customer service since they implemented a fleet tracking solution.