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UK Labour productivity declines

UK labour output per hour worked fell by 0.2% in the third quarter of 2012, contrasting positive recent employment figures.

Output per hour in the services sector fell by 0.1% in the third quarter, 0.9% in manufacturing and 1.2% in the broader production sector.

The fall in productivity is unusual following a financial crisis, as this would normally lead to increased productivity.

Britain’s economy shrank by around 7% over the course of the 2008-2009 recession, and there has been some confusion as to why employment has been rising.

Economist and labour market expert, John Philpott wrote on his blog: The continuing and deepening productivity recession highlights the degree to which rising employment levels mask a severe underlying shortage of demand in the UK economy.

“This situation continues to be sustained by an ongoing pay squeeze which is helping to keep wage costs in check.

“Despite this, however, the annual rate of growth of unit labour costs remains well above 3% at a time when, after several years of real pay cuts, the exercise of pay restraint has probably reached workplace tolerance levels.”

This was posted in Bdaily's Members' News section by Tom Keighley .