Productivity Falls Despite High Employment

Today’s labour market figures published by the Office for National Statistics (ONS) show the employment rate at 76.1% for April to June 2019, the joint-highest since comparable records began.

The economic inactivity rate was 20.7%, the joint-lowest on record, and the unemployment rate was at 3.9%, lower than a year earlier.

However, today’s ONS flash estimate of UK productivity showed that for April to June 2019, output per hour – the main measure of labour productivity – fell by 0.6% compared to a year earlier. This is the fourth consecutive quarter of negative growth for productivity.

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, said:

“Dropping productivity is a huge issue and will constrain the ability of the economy to sustain rising pay.

“Addressing skills shortages is part of the answer to this conundrum. Up and down the country businesses are struggling to find the skills they need – as REC’s Report on Jobs shows. Reforming the apprenticeship levy to help temporary workers progress is a vital part of filling gaps, but this must be paired with a sensible approach to immigration for work. 

“The kind of unrealistic salary threshold proposed by the Home Secretary would starve sectors like IT, engineering, and agriculture of the people they need to drive prosperity for all of us – not to mention the huge damage it would do the NHS. 

“It’s time for government to work with businesses to design policies that work on skills and immigration. Recruiters are ready to step up – and have a huge role to play as hiring mistakes cost UK businesses millions of pounds every year, as our research shows. Good, inclusive recruitment underpins productivity. Recruiters are local labour market experts, a valuable resource in helping businesses find great employees.”

ENDS

Notes to Editors:  

1. The full overview of the latest ONS labour market statistics can be found online here.
2. The ONS UK productivity flash estimate for Q2 2019 can be found here.
3. The KPMG and REC Report on Jobs is a survey of 400 recruitment and employment consultancies about the labour market, compiled every month by IHS Markit. More information can be found here.
4. More information on the REC’s Perfect Match research report can be found here.

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