Britain still lags behind economic rivals despite government pledge to improve output
The productivity gap between the UK and the other G7 countries is the biggest it's been since comparable estimates began in 1991, figures from the Office of National Statistics (ONS) suggest.
According to the data, the UK is lagging behind all but Japan in both productivity per hour and output per worker.
The figures come only months after the Government report, Fixing Foundations: Creating a more prosperous nation, which launched a 15-point plan to help tackle the UK's 'productivity puzzle'. The aim is to make Britain the richest of all the major economies by 2030.
The ONS productivity statistics are estimates complied ahead of revisions to UK National Accounts. Any updates will be reflected in revised figures published in February 2016.
First estimates for 2014 show that on an output per worker basis, UK productivity was found to be 20 percentage points below the average for the rest of its G7 counterparts – the United States, Canada, France, Germany, Italy, Japan.
For output per worker, the UK was above Japan by 12 percentage points, below Canada and Germany by 5 and 9 percentage points respectively, and below Italy and France by 14 and 16 percentage points respectively.
Comparing levels to that of the US, the UK trailed by 41 percentage points, the largest differential since the data began in 1991.
Output per hour was found to be lower in all G7 countries in 2014 than would have been the case if pre-downturn trends had continued since 2007. The UK's productivity gap of around 18 per cent compares with a gap of about 7 per cent for the rest of the G7.
Mark Beatson, chief economist at the CIPD, said: "The fact that we have been lagging behind is a very long term problem and we have been trailing some of these countries for decades. We are roughly back to where we were 25 years ago and a lot of the hard work has been undone."
He added, however, that there are indications UK productivity is improving.
"If you look at output and employment data then the implication is that in the second quarter of 2015 we saw quite a bit of productivity growth. It may be that in 2015 and hopefully into 2016 we start seeing a better picture."
Beatson said the CIPD had previously expressed concerns that the Government's 15-point plan was limited.
"In terms of learning and skills it is focussed on apprenticeships and universities. While this is important, the plan says little about what happens for the next 40 years. It is important to equip new entrants to the workforce with skills but what about the existing workforce? What support are they and their employers getting to help them upskill?” he said.
"The other thing it doesn't say much about is how can businesses be encouraged to make use of investments [to improve] job design, quality of management and employee engagement. Those aren't areas the government can control, as that is up to business at the end of the day, but the government can promote management standards,” he added.
James Sproule, chief economist at the Institute of Directors, said that in an era of major technological change, businesses should be focusing more on agility than productivity.
"The economy of the future looks set to be dominated not by big companies, but by fast, agile, quick-moving and reactive ones. The firms that can respond to consumer demands most effectively and bring new products and services to market will reap the rewards,” he said.