More on productivity

ONS has published analysis of its microdata on the productivity of UK firms since the downturn.  On the ONS website, see Microdata perspectives on the UK productivity conundrum, An Update, released on 4th October.

Overall, they show working hours back above and output below pre-downturn levels.  Hence, productivity is still falling on average.  But, the variation by firm and by sector is wide.  ONS confirms that exporters, foreign-owned and larger companies perform better, in relative terms, as do high broadband users – although, the downturn has had more negative effects on some of these ‘better’ categories in absolute terms.

The ONS’ central finding is that the lack of recovery in productivity is worse for services (excluding the financial and communications sectors) than manufacturing, and that labour productivity performance in 2010 was weaker among smaller firms than larger firms across all sectors.

This research confirms that historical relationships about productivity in UK firms persist but shows that the downturn has narrowed some of the relative gaps and has been worse, generally, for smaller, low-tech services than for most.

As we have said before, we believe that these trends have to improve before the recovery can be considered secure and sustainable.