Furlough skews figures but historic low productivity remains an issue
7 Jul 2020
Office of National Statistics figures for the first three months of the year reveal a fall in UK productivity of 0.6% compared to last year.
The figures cover the period to the end of March and only demonstrate the impact for the early period of the coronavirus lockdown.
This fall in productivity is heavily influenced by the advent of the Government’s furlough scheme. This registered furloughed staff as employed despite their enforced inactivity.
It also shows Labour costs risen by more than 6% – the fastest rate increase in 14 years. Productivity meanwhile was at its lowest growth rate since 2009.
However, Andrew Duncan, UK CEO of Infosys Consulting, pointed out that the growth in the numbers of non-furloughed employees working from home had boosted productivity in certain sectors.
“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 stated.
Duncan added that sectors such as entertainment, construction, food, hospitality and retail which received the brunt of the impact and would be challenged to return to pre-COVID-19 levels of productivity as consumers slowly eased out of lockdown.
However, for those in the business services sector, the shift to virtual and remote working had increased productivity.
“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.
Adoption of robotics and automation would probably be a critical driver of productivity growth in the post COVID-19 economy, advised Duncan. 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 skills and the tools they need to cope with automation, said Duncan.
“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."