LONDON, United Kingdom. The UK’s productivity lagged behind every G7 advanced economy bar one in 2014, official figures suggest.
The Office for National Statistics (ONS) said its first estimate suggested that output per hour and output per worker were 20% lower than the average achieved by the US, Germany, France, Italy, Japan and Canada.
It marked the “widest productivity gap since comparable estimates began in 1991”, the ONS said, with only Japan being less productive.
The reasons for the weakness in output have become known as the ‘productivity puzzle’ – with some economists suggesting part of the UK’s problem was the growth in low-paid and low-skilled jobs in the wake of the financial crisis.
A tendency for companies to stockpile cash and slash investment has also been cited.
The ONS figures showed that Britons work fewer hours than most of their G7 competitors, with Americans leading the way.
The statistics mark a low point for the Government as it bids to boost productivity following the damage inflicted on the economy by the credit crunch and resulting recession.
The Chancellor confirmed after the election in May that a sell-off of publicly-owned corporate and financial assets aimed to raise billions of pounds for investment in areas such as skills, childcare and communications.
Reacting to the figures, the general secretary of the TUC union organisation, Frances O’Grady, said: “Without a step change in productivity growth, the UK economy will struggle to deliver secure jobs and higher living standards.
“We need a better economic plan focused on higher public investment in modern infrastructure and workforce skills.
“A new round of severe public service cuts and pay freezes will keep the UK in the slow lane.”
However, the Institute of Directors suggested too much emphasis was being placed on productivity ahead of agility.
Its chief economist, James Sproule, said: “A closer collaboration between universities, businesses and investors, and a warmer embrace of equity finance for instance, will help create the knowledge-intensive, risk-taking and entrepreneurial businesses which will drive productivity gains.”
Credit: Sky News
