UK Productivity Has Not Improved For Eight Years – It’s Got Worse
The productivity of the UK workforce remains slightly lower than in 2007 highlighting the importance of our Employee Engagement Summit this week
The Office for National Statistics (ONS) said UK labour productivity fell 0.2% in the last three months of 2014. That meant productivity last year remained “little changed” on 2013 and is in fact worse than before the global recession first hit eight years ago.
The Bank of England has previously raised concerns about productivity levels. The ONS said labour unit costs – otherwise known as employee benefits, which include wages, pension contributions, bonuses and other benefits such as private healthcare – had increased by only 1% a year over the last five years.
The figures come a day after the ONS revised fourth-quarter GDP figures, which led to annual economic growth being uprated to 2.8% from an earlier estimate of 2.6%.
The economy is a major theme of this year’s general election, with Labour arguing the economy’s recovery from the financial crisis has been the longest and shallowest on record.
The Conservatives have pointed to the fact that there are more people in work than ever before and that wages and living standards have begun to rise.
While the UK now has historically high levels of employment, the Bank of England has suggested many people may be underemployed.
It has previously suggested the economy may have as much as 1.5% spare capacity, meaning the economy is performing below its potential because of a lack of productivity in the workplace and underinvestment by business.
Another possible explanation for low UK workforce productivity in the years since the financial crisis is that businesses refrained from making staff redundant where possible, while freezing or cutting salaries instead.
The Bank of England says that as the economy improves, more businesses will begin to reinvest in expansion, which should lead to improved productivity..