British Workers Amongst Least Productive in Developed World, says ONS

Posted on 24 September, 2012 by Kirsten Kennedy

With economic woes weighing heavily on the heads of all British businesses and their employees, it would be safe to assume that everyone is working as hard as they can in order to pull the UK out of recession. And with British workers putting in some of the longest working days in Europe, at an average of 42 hours per week, surely British productivity must be at an all-time high.

Unfortunately, the Office of National Statistics disagrees with this reasoning, claiming that British workers are amongst the least productive in the developed world.

The figures, published in a report earlier this week by the ONS, puts the UK second bottom in the Group of Seven industrialised nations, or G7. Productivity, in this case, is measured by the rate of economic output per worker.

In 2011, Britain came below Canada, Germany, Italy, France and the United States in terms of worker productivity, with only Japan scoring lower than this country. Not only are we sitting at the bottom of the table, the gap between the UK and the United States is a worrying 39 percentage points, and appears to be widening significantly year upon year.

However, these results do not necessarily indicate that British workers are lazy, but that – in a startling contrast to the usual jobs worries – too many people in the UK are employed for our productivity to reach a peak. As highlighted by Movehut several weeks ago, many businesses are choosing to keep excess workers on the payroll as preparation for a time when the recession ends and businesses can begin to work at maximum capacity again.

Yet this means that many workers find themselves with not enough to do, a phenomenon described as “the hidden unemployed” by Ben Broadbent of the Bank of England’s monetary policy committee.

Of course, with excess staff on the books, companies cannot hope to achieve maximum productivity in terms of economic output per worker. Yet when the British economy picks up again, there is a high likelihood that productivity rates will skyrocket due to higher levels of business to business trading.

Rising numbers of people in jobs whilst the economy is simultaneously shrinking is a relatively new phenomenon in this recession, as in the majority of all recessions the unemployment rate rises dramatically. UK economist at Deutsche Bank, George Buckley, believes that this is the biggest contributing factor to the ONS’s findings.

He says; “Productivity – output per person or per hour worked – has been exceptionally weak in this recession.

“In fact, depending on exactly how we measure it, UK workers are 2 per cent to 3 per cent less productive than before the crisis five years ago.

“In the absence of a crisis, we would have expected to be well over 10 per cent more productive than five years ago.”

Of course, falling rates of productivity have also had a huge effect upon the GDP. The ONS study shows Britain to be lagging 15 per cent behind the rest of the G7 for GD per hours worked, with 27 percentage points separating us and frontrunners the United States.

The question is, really, whether Britain would be better dealing with a high unemployment rate or, as in the current situation, disappointing GDP figures. As UK managing director for Manpower, James Hick, points out, a rising rate of employment during a recession does mean the sacrifice of Britain’s standing in official GDP totals.

He says; “We have been saying that the jobs market is heading in the right direction since the beginning of the year.

“Understandably this has been met with scepticism because of the disappointing GDP figures.”

Britain, then, finds itself in something of a catch 22. With a higher unemployment rate, it is less likely that the economy within the country will improve, as consumers will be less able to afford to spend money, thus creating stagnation within the economy itself.

Yet Britain’s international trading standing may be damaged irreparably by a low GDP figure, with large multinational corporations and companies possibly being less willing to invest time and money into the country than they would otherwise have been even after the financial difficulties are resolved.

All in all, the recession appears to be creating more and more problems with each passing day. Hopefully, with all indicators pointing towards a resolution to our money worries in the not too distant future, the country will be able to get back on its feet before any long term damage to the UK’s international reputation can be cemented.

Do you think it is more important to make sure workers in this country have jobs, or to increase Britain’s productivity levels? How would you go about creating a balance between productivity and employment?

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