UK Productivity Continues to Decline

Recently released ONS statistics show that UK workforce production continues to slump. Productivity has been heading steadily downhill for the last 12 months, with a 0.4% drop between May to August, compared to the previous three-months.

  Shrinking Sectors

The manufacturing sector was the leading contributor to the ongoing fall. 11 of 13 manufacturing subsectors, including tobacco and food and beverages, struggled to flourish in tough conditions. Overall, this led to a 1.1% slump in the sector’s growth.

Manufacturing is a key contributor to the UK economy, responsible for a significant slice of exports (44%). The sector also employs over 2.5 million people. Any slowdown has a major effect on overall production figures for the UK as a result.

Mining and Quarrying saw -2.3% growth in total, which also played a part in the recent downturn. The sector contributes less to the country’s total production, however, meaning the negative impacts were smaller, but relevant.

  Growing Sectors

Some businesses performed well despite the overall productivity drop. Electricity and Gas saw a 3.2% increase, with the Manufacture of Gas subsector being the largest contributor with 5.4% growth.

Water and Waste Collection also helped rebuff lower production levels. The sector saw a 1.6% increase in growth, contributing 0.15% to the national product.

  Potential Knock-on Effect for Employment

In addition to hitting the national product hard, employment prospects for those with manufacturing skills currently searching for work aren’t looking good. With most manufacturing subsectors failing to create any growth, increased hiring in the coming months looks doubtful.

There’s also the danger of layoffs should this trend continue. Even a small percentage of the sizable manufacturing workforce becoming unemployed could quickly burst an already degrading employment sector bubble.

In the face of a global economic downturn, skills shortages, and the now almost reliable uncertainty of any Brexit clarity, the chances of such a situation becoming reality are, unfortunately, ever-increasing.