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UK labour productivity drops, spelling trouble for jobs and pay, says CIPD

David Woods , 30 Mar 2012

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UK labour productivity fell by 0.7% in the fourth quarter of 2011 on an output per hour basis, according to the Office for National Statistics (ONS).

Its findings found Market sector productivity fell by 1% on this basis.

Productivity of the service sector fell by 1% in the fourth quarter, but manufacturing productivity rose by 0.7% to a record level in the fourth quarter. Productivity in the broader production sector fell by 0.3%.

UK unit labour costs increased by 1.2% in Q4. Manufacturing unit wage costs fell by 0.2 per cent over this period.

John Philpott, chief economic adviser at the CIPD, said: "There is good news but also worrying news in the latest official snapshot of UK productivity. Manufacturing productivity is powering ahead which bodes well for business competitiveness and export led growth.

"But signs that service sector productivity is falling and putting upward pressure on unit labour costs spells trouble for jobs and pay. While businesses operating in private sector services continue to experience weak demand they will not only be reluctant to hire more staff but may need to ask existing staff to accept a further period of pay restraint to avoid job cuts.

"With the service sector accounting for the vast majority of UK employment, and private sector service employers the main hope for the new jobs needed to offset the ongoing public sector jobs cull, these latest growth and productivity figures increase the risk of a weak 'job loss recovery' this year."

 

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