UK Industry productivity at all-time low as furlough skews figures

Productivity has become a major issue within the UK as the Office of National Statistics data shows a fall of 0.6% when compared with the same period last year. The figures cover the period to the end of March and only demonstrate the impact of the earlier period of the COVID-19 lockdown.

The government’s furlough scheme, to allow many workers to retain much of their pay while either adhering to social distancing policy or being absent from work entirely, has greatly accentuated these figures.

These workers were still registered as employed despite their prolonged leave of absence.

The same statistics also show labour costs rose by more than 6% - the fastest rate in 14 years. Productivity meanwhile was at its lowest growth since 2009.

Andrew Duncan, CEO of UK Infosys Consulting, pointed out that the growth in the numbers of non-furloughed employees working from home had boosted productivity in certain sectors.

He said: “There has been a fear that the global work-from-home movement, intended to maintain output and efficiency during the COVID-19 pandemic, could actually generate a worldwide productivity slump.

“But from what we’ve seen so far, there is significant variation in the impact on productivity from COVID-19 across industries. This divide is likely to grow in the second half of 2020.”

He added that sectors such as entertainment, construction, food hospitality and retail which received the brunt of the impact and would be challenged and return to pre-Covid levels of productivity as consumers slowly eased out of lockdown.

Contrary to this, those in the business sector had noted increased productivity during the lockdown due to the shift to virtual and remote working.

Mr Duncan added: “As a result, many businesses will make the permanent shift to digital remote working models, with an ‘anywhere, anytime’ mindset. This increasingly digital workforce will naturally bring about a shift in measuring and incentivising success – and there will be a readjustment in productivity measurements globally.”

Additionally, the adoption of robotics and automation would likely be a critical driver of productivity growth in the post-coronavirus economy, Duncan said. The UK’s low productivity has been a historic problem that preceded the pandemic by decades.

However, the move to greater automation would rely on equipping the workforce with the same skills and the tools they need to cope with automation.

He added: “This will demand close collaboration with industry, government and educational resources, and in the future, we can expect to see governments strongly encourage corporate investment in training in these areas."

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