Despite further improvements in UK productivity and unit wage costs ñ as shown in figures for the second quarter of 2006 released this morning by the Office for National Statistics (ONS) ñ performance remains disappointing according to John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD).
John Philpott, CIPD Chief Economist, says:
ìWhile UK productivity growth has clearly recovered from the trough of 2005, a better outcome might have been expected at this stage in the recovery cycle, adding weight to the suggestion that the underlying trend in productivity growth has deteriorated in recent years. Although this might be attributed to a greater tax and regulatory burden on business the main factor is more likely to be poor productivity in the public sector despite a massive boost from public spending.
ìAccording to the ONS figures manufacturing productivity is recovering well and this is likely to be true across much of the private sector. By contrast the public sector clearly needs to raise its game and it is vital that the government resists calls to slow down the pace of public sector reform.
ìGiven the disappointing productivity figures, the fall in growth in unit wage costs is also less than might be hoped for at a time of modest growth in whole economy average earnings. But with an excess supply of labour at present keeping pay settlements in check this should not be a matter of any great concern to the Monetary Policy Committee.î
Disappointing improvement in productivity and unit wage costs
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