Business leaders have been warned that the UK’s lacklustre productivity performance is continuing, after new figures showed minimal growth.
The latest productivity figures published by the Office for National Statistics show that output per hour rose only 0.1 per cent in the third quarter of last year - compared to the same period in 2018 and because earnings growth is outstripping output, the cost of labour has risen by 3.6 per cent - leading to calls for employers to invest in skills and technology.
Gerwyn Davies - senior labour market adviser at the CIPD, the professional body for HR and people development - said:
“These latest figures offer further evidence that stronger earnings growth isn’t encouraging employers to invest in higher levels of productivity. Political uncertainty may have cast a shadow over some UK businesses’ confidence levels and held them back from investing over the recent past. However, with some of that uncertainty now removed, employers should be looking to improve output through greater investment in skills and technology, and not through intensifying work.”
He added:
“The introduction of new migration restrictions - alongside another generous up-rating in the national living wage later this year - is a compelling reason for employers to make this a priority. A failure to do this may result in job cuts in some cases. And, while the government’s commitment to increasing investment in infrastructure is welcome, more business support is needed for small firms to help them make the right investment, particularly in how they manage and develop their staff.”
Matt Weston - Managing Director of recruitment firm Robert Half UK - commenting on the figures issued by the Office for National Statistics, said:
“Employers can expect to be at the receiving end of promotion and pay rise requests while top professionals will be fielding multiple job offers. In order to win the war for talent, employers will need to consider a flexible hiring strategy, looking at both permanent and temporary staff to bring a range of skills and experience to the team and help tackle any productivity challenges.
The onus is also on employers to provide a competitive remuneration package that is attractive to staff. That said employees are also receptive to other benefits such as flexible working, health and wellbeing perks and training opportunities, all of which should be considered as part of any offer to retain or attract a talented team.”
Katherine Kent - Head of Productivity at the Office for National Statistics - commented:
“Although productivity grew on the year, the underlying picture is of sustained weakness since 2008, with growth over the past year being only a third of the average over the last 10 years or so. The significance of this continued weakness has now been recognised by the Royal Statistical Society, which named this poor productivity performance as its ‘UK Statistic of the Decade’.”
Tej Parikh - Chief Economist at the Institute of Directors - stated:
“The UK’s lacklustre productivity performance goes on, laying bare the challenge facing the new Government. A long period of uncertainty has sapped business leaders’ confidence to invest in the equipment and technology they need to drive productivity growth. Meanwhile, talent shortages and bottlenecks in our infrastructure have constrained our ability to catalyse economic activity. The UK’s decade-long struggle to raise its productivity game has in turn restrained wage growth.
