The decision by many employers to hold on to staff rather than make them redundant during the economic slowdown of 2005 has worsened the UK's labour productivity performance, according to figures from the Office for National Statistics.

However, it says the UK's position will look better when the productivity rebound of 2006 is eventually accounted for, according to the Chartered Institute of Personnel and Development’s chief economist Dr John Philpott.

“2005 should be seen as a disappointing blip in a period of gradual improvement stretching back over a decade,” says Dr Philpott.
“Indeed, things will look better when figures for 2006 are available, reflecting last year's rebound in productivity which saw organisations boost output primarily by making better use of their existing staff.

“To make further progress the UK needs more investment in capital, skills and technology and, in particular, must strive to make better use of the capital and skills already available. This means better management, not just in the private sector but also in the public sector where organisations have in recent years failed to match the productivity gains achieved by commercial enterprises,” added Dr Philpott.