UK Productivity Falls as Working from Home Takes Hold
UK productivity tumbled in the first three months this year as coronavirus forced workers into their homes. Official stats from the Office of National Statistics showed labour productivity fell by 0.6% from January through to March compared with the same period a year ago.
Output per worker was down by 3.1% over the same period, reflecting the impact of the government’s job retention scheme, under which furloughed workers still count as employed for statistical purposes.
The ONS said about the stats: “This reflects the impact of “furlough” schemes, which reduced hours worked but preserved workers’ employment statuses.”
Labour costs jumped by 6.2%, its fastest rate since 2006, also as a result of the furlough scheme.
Productivity fell across the whole economy. Output per hour was hardest hit in the property sector, with a slump of 10.5%.
Productivity was a major problem for the UK economy even before coronavirus struck. The UK has some of the worst worker output rates in the developed world, with many economists blaming a lack of investment in skills and IT by senior managers and executives.
The ONS added: “Low labour productivity growth looks set to continue into the new decade as the UK economy faces further disruption. “This sustained period of weak growth has been labelled the UK’s “productivity puzzle” and is arguably the defining economic question of our times.”
The ONS said it was too early to know if working from home increases or decreases productivity. The statistics body said: “The coronavirus pandemic has forced employers and employees to adjust to new working schedules and arrangements, such as working from home, which may have either positive or negative impacts on the productivity of different parts of the economy.”
Productivity likely deteriorated further in the second quarter when the UK felt the full force of government coronavirus restrictions. The country went into lockdown on March 23. Data for April to June will be published on October 7, the ONS said.