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UK productivity among the lowest of the G7, finds ONS

Output per hour worked by UK employees is among the lowest of all the G7 countries, according to new data published by the ONS.

The analysis reveals that while all G7 countries have seen rises in productivity since the start of the coronavirus pandemic, workers in America were a staggering 23% more productive in 2019 than UK workers, while those in France and Germany were around 18% and 10% more productive than UK staff respectively.

The data showed that, on average, the output of G7 workers – excluding those from the UK – was 13% higher than those British workers during 2019.

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Reacting to the research Stephen Bevan, head of HR research at the Institute for Employment Studies told HR magazine: “This is yet more data that reinforces the long-running story of the UK lagging behind in productivity.”

He added: “Whether it can be improved comes down to what HRDs think the ingredients to poor productivity are: poor investment in technology or poor investment in skills of staff, or both.

“The trend – even before COVID – for firms investing in either technology or staff hasn’t been good. And with companies struggling as they are, it seems unlikely improvements will happen any time soon.” 

According to the data four G7 nations produced more output per worker in 2019 than the UK, with the best performer being the US, which produced 35% more output per worker than the UK.

Only Japan and Canada had lower output per worker than the UK, producing 22% and 3% less, respectively.

Also agreeing poor productivity is the result of low investment, Micheal Moran, CEO of 10Eighty said: “The UK always appears near the bottom of the productivity league after many years of little or no capital investment.

"We have also failed to invest in human capital, the consequences of which are low levels of engagement and employees jumping ship at the first opportunity to increase their remuneration.”

He added: “Allowing employees to sculpt their roles around skills and working preferences should increase productivity. To an extent, this is what we have started to witness during the pandemic through remote working.”

Bevan however suggested that paying rising wages – which some argue discourage employers from investing in technology – could have a silver lining.

“Paradoxically,” he said, “if labour costs rise rapidly, technology that makes workers more efficient might suddenly make sense.”

Overall output per worker in the UK grew by just 0.8% per year from 2009-2019. Although this is the same as the G7 average for this time period, the US saw its productivity grow by 1.1% per year in the same decade.

Looking specifically at output during the coronavirus pandemic, ONS found that in the UK, hours worked fell faster than the fall in output, leading to an increase in output per hour worked (especially as the industries most affected tended to be those with lower levels of productivity anyway). But it also found the UK had large falls in both GDP and hours worked compared with other G7 nations.