According to data from the Office of National Statistics, labour productivity in the fourth quarter of last year (Q4 2018), as measured by output per hour, fell by 0.1% compared with Q4 2017; this is the second successive quarterly year-on-year fall, following the decrease of 0.2% seen in Q3 2018; and while services experienced labour productivity growth of 0.4%, manufacturing decreased by 1.1%.
Compared with Q3 2018, UK labour productivity grew by 0.3% in Q4, this increase reflecting a slight decrease in the number of actual hours worked.
That said, ‘productivity hours’ worked increased by 1.5% in Q4 2018 compared with Q4 2017, while the number of jobs increased by 1.3%. In 2018, labour productivity measured as output per hour grew by 0.5% compared with 2017, with increases in services and manufacturing of 0.8% and 0.3% respectively.
Output per job increased by 0.3% in 2018 compared with 2017, with services growing by 0.6% over the year, while manufacturing fell by 0.7%.
Responding to the announcement that UK’s productivity growth in Q4 2018 decreased for the second consecutive quarter, Mike Cherry — national chairman of the Federation of Small Businesses (FSB) — said: “The data highlights yet again the impact of the political and economic uncertainty to the economy.
Small-business confidence has fallen through the floor, as firms face a trying time amid a fragile economy. While there were some positives in the data, such as a 0.4% productivity increase in services, there was a significant 1.1% decrease for manufacturing.
“Small firms are not only contending with unprecedented uncertainty, they are also dealing with a raft of new cost increases and reporting requirements.
Rising labour costs have continued with the introduction of Making Tax Digital, fresh hikes to business rates and a further increase in auto-enrolment pension contributions.
“In order to improve productivity, key areas that must be addressed include management and leadership, broadband connectivity and the scourge of late payments — all this amid the on-going uncertainty over the future of the UK’s relationship with the EU.
“Productivity will only continue to decline, unless the Government can do more to back British businesses.”