The decision by many employers to hold on to staff rather than boost redundancies during the economic slowdown of 2005 resulted in a worsening of the UKís relative labour productivity performance, as shown in official figures published today by the Office for National Statistics (ONS). But, says the CIPDís Chief Economist Dr John Philpott, the UKís relative position will look better when the productivity rebound of 2006 is eventually accounted for, while the longer-run trend remains encouraging.
Dr Philpott comments:
ìAs the CIPD expected, the UKís productivity gap with the average of the G7 major economies got wider in 2005. The relative deterioration would have been worse had Germany and Italy not also performed poorly. However, 2005 should be seen as a disappointing blip in a period of gradual improvement stretching back over a decade. Indeed, things will look better when figures for 2006 are available, reflecting last yearís rebound in productivity which saw organisations boost output primarily by making better use of their existing staff.
ìEven so, the productivity gap with the United States and France remains substantial. To make further progress the UK needs more investment in capital, skills and technology and, in particular, must strive to make better use of the capital and skills already available. This means better management, not just in the private sector but also in the public sector where organisations have in recent years failed to match the productivity gains achieved by commercial enterprises.î
íLabour Hoardingí by employers in 2005 widens UK productivity gap with major economies
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