Despite rising employment, UK’s productivity gap is widest since records began

UK’s productivity rate languishing 18% below average for G7 countries

Employment in the UK has reached record levels. Meanwhile, there are also more job vacancies than ever. It doesn’t sound so bad.

But workers’ wages are not in similarly rude health. With employment up and joblessness not increasing, economists expect to see wages rise.

This hasn’t happened.

Wage growth slowed in the three months to December 2015, to 1.9%. This is around half the rate of growth UK workers enjoyed before the financial crisis.

So doing work is up, but being paid for it is down. In addition, or perhaps because of this, the productivity of the British workforce is declining.

Productivity is usually measured by output per hour. In the UK, our productivity rate was 18 percentage points lower than the average for the rest of the G7 group of leading economies in 2014, according to the Office for National Statistics.

This is the largest gap since comparable records began in 1991.

Of the G7 countries, Germany has the highest rates of productivity and only Japan has lower productivity rates than the UK.

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