UK employee productivity 21 per cent lower than G7 average, data shows
Employers are increasingly more confident about hiring new staff this year and the trend is expected to continue, according to the latest BDO Business Trends Report.
In the consultancy’s employment index a reading of 100 indicates jobs growth ‘above the long-term trend’. The reading for March 2015 is 113, which follows on from an equally high reading for the preceding month at 113.1.
The report said that two months’ strong data means employer’s hiring intentions are now “sky high”. This feeling is strengthened by the fact these levels are now stronger than the period of economic boom in the 2000s.
However, the news comes amid other mixed economic indicators. Last month, UK businesses saw their overall costs fall for the first time in six years, which economists agree is thanks largely to the collapse in crude oil prices. And only last week the Office for National Statistics (ONS) revealed that profits for a range of companies showed a downward trend.
ONS found service companies’ net rate of return was 16.9 per cent in quarter four 2014 – down from the highest recorded quarterly level of 18.4 per cent in quarter three 2014. Private (non-financial) company profits were also down, from 12.3 per cent to 11.9 per cent.
These statistics also come as the UK’s productivity problem, signalled by high employment and, low productivity continues.
Statistics reveal Britain’s workers were less productive in the final quarter of 2014, with output per worker falling 0.2 per cent There has now been an absence in productivity growth for seven years, and productivity per worker is now 21 per cent lower than the G7 average.
In fact British workers' output per hour has now been static during the last two years of the recovery. BDO partner, Peter Hemington, said: “While it is encouraging to see strong business confidence, the UK’s continuing poor labour productivity performance is a very significant concern.”
He added: “Although employment growth in recent years has been strong, much of this has been in part-time jobs. Productivity ultimately determines our prosperity so it is a crucial area that must be addressed. Policymakers of all persuasion must take on this productivity puzzle."