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UK productivity returns to its pre-downturn level

Latest release of data sheds more light on UK productivity

Labour productivity grew by 0.6% in Q2 2016, according to new data released yesterday by ONS. As a result, the UK’s output per hour worked has returned to its pre-downturn level for the first time since the onset of the economic downturn. While productivity remains far below the level implied by its pre-downturn trend, this is the first time that the UK has passed this threshold.

New estimates of the ‘productivity gap’ between the UK and other leading economies are also published yesterday. They show that the gap between the UK and the rest of the G7 remains stubbornly wide – at around 18 percentage points in GDP per hour worked terms in 2015 – unchanged on a year earlier. On this measure, productivity in the UK in 2015 was 27, 30 and 35 percentage points lower than in France, the USA and Germany respectively.

Public sector productivity is now estimated to have fallen by 0.6 per cent in 2015, revised down from the previous estimated fall of 0.2 per cent. Nevertheless, the trend since 2009 has been upwards, with cumulative growth of 3.2 per cent since that time.

These datasets are contained in the latest and largest quarterly Productivity Bulletin to date – which brings together statistics, analysis and research undertaken by ONS on productivity. This release also contains the first results of ONS’ pilot Management Practices Survey for the manufacturing industries. ONS results suggest that management practices vary widely across firms in Great Britain. They are more structured in larger firms and in multinational firms, and tend to be less structured in family-run and family-managed firms.

Commenting on yesterday’s figures, ONS Chief Economist Joe Grice said:

“Productivity, and its sluggish growth over the last decade or so, are central issues for the UK economy. ONS has responded to this by making its measurement and analysis a key priority. Yesterday’s bundle of releases is the latest and most substantial of a regular quarterly series, dealing with productivity developments and its drivers, across a wide range of dimensions.”

Commenting on the Management Practices Survey, ONS Head of Productivity Philip Wales, said:

“The first results of the pilot Management Practices Survey are an important milestone, and suggest wide variation in management processes across firms. In time, these data and our other improvements to official productivity measures will help ONS, policy-makers and the research community to better understand the dispersion of firm-level productivity and our productivity performance at a macroeconomic level.”

These results come alongside new information on:

  • How changes in the composition of the workforce have affected the effective supply of labour in the UK – with a negative contribution coming from labour quality in the most recent year of data (the ‘Quality of Labour Input’ release)

  • The results of discussions between ONS and the Institution of Engineering and Technology (IET), looking at how to improve the measurement of economic output of the telecommunications industry

Background Notes

  1. Full details of the productivity data published yesterday can be found on our website.
  2. More information about ONS’s work developing the Management Practices Survey can be found on our website.
  3. More information about ONS’s work with IET can be found on our website.
  4. Details of the policy governing the release of new data are available from the media office.
  5. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

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