According to the Office of National Statistics (ONS) output per hour dropped by 0.5 per cent after four consecutive quarters of negative growth for labour productivity.
Jon Boys, labour market economist at the CIPD, said:
The statistics confirm that poor productivity still haunts the UK economy. Worse still, it’s actually down on the same quarter of last year.
Businesses may have more immediate concerns than raising productivity, but it’s the only way to increase pay packets in the long term. We mustn’t be fooled by recent strong earnings growth figures, which have been driven by a tight labour market and not an increase in employers’ ability to pay.
Though we talk of a productivity puzzle, there is an obvious culprit and that’s uncertainty. Government needs to reduce uncertainty, so businesses aren’t deterred from investing for the future. We need to see more money being put into skills and people management training given our service dominated economy, where the knowledge and talents of individuals are what gives UK PLC its USP.
Tom Hadley, director of policy and campaigns of the Recruitment & Employment Confederation (REC), said:
As productivity falls for another quarter, government needs to ask itself serious questions about how to sustain rising pay and meet ambitions for a higher National Living Wage.
Addressing skills shortages is part of the answer to this conundrum. As businesses up and down the country, in sectors like IT, healthcare and logistics, are struggling to find the skills they need. In the shadow of Brexit uncertainty, businesses are also scaling back ambitions to hire new staff and invest in their operations.
But this isn’t just about skills, it is also about employers getting the best of their people through good management practices and by boosting progression opportunities. Government can help by reforming the apprenticeship levy to help those on temporary and flexible contracts. This must be paired with an evidence-based approach to future immigration policy, and a negotiated and orderly exit from the EU.
Matt Weston, managing director, Robert Half UK, a specialised recruitment agency, said:
The announcement that productivity continues to fall is exacerbating the UK’s ‘productivity puzzle’. Macroeconomic trends, the need for digitalisation and an evolving workforce all compounded by the impact of Brexit means change is the only constant for business today.
Independent research developed for Robert Half’s 2020 Salary Guide found that the UK’s skills shortage is expected to cost UK SMEs £318,000 in the next five years. The skills gap prevents businesses from innovating, developing new products and growing their business. This in turn harms productivity, which remains a crucial long-term challenge for business leaders.
Darius is the editor of HRreview. He has previously worked as a finance reporter for the Daily Express. He studied his journalism masters at Press Association Training and graduated from the University of York with a degree in History.
