In Quarter 4 (Oct to Dec) 2021, output per hour worked was 2.3% above levels recorded prior to the coronavirus (COVID-19) pandemic (the 2019 average). See Section 3.
Output per worker was above the 2019 average level for the first time since the coronavirus pandemic began, growing 0.8% on 2019 and 1.1% quarter-on-quarter. See Section 4.
Total hours worked in the economy were unchanged in Quarter 4 2021 compared with the previous quarter, despite the end of the furlough scheme, as average hours fell, after adjusting for the effects of furlough. See Section 5.
Within-industry productivity growth contributed more to UK productivity growth than the between-industry reallocation for the first time since Quarter 3 (July to Sept) 2020. See Section 6.
The labour productivity flash estimate uses the latest labour market statistics and the gross value added (GVA) first quarterly estimates to provide the first look at UK productivity for Quarter 4 (Oct to Dec) 2021.
We are continuing to compare our quarterly estimates with the most recent stable period before the coronavirus (COVID-19) pandemic, which is the 2019 average. Comparing Quarter 4 2021 with the 2019 average gives a more reliable perspective on the effect of the coronavirus pandemic. As a result of the coronavirus pandemic, productivity growth across 2020 and 2021 has been volatile. For this reason, we recommend looking at longer-term trends. Table 1 outlines the latest productivity statistics.
|Output per hour worked||Output per worker|
Download this table Table 1: The latest productivity statistics.xls .csv
Quarter 4 2021 was the first quarter since before the coronavirus pandemic in which there were no workers on the Coronavirus Job Retention Scheme (CJRS). Despite this, total hours worked in the economy were unchanged compared with the previous quarter, suggesting a fall in average working hours of those not on furlough (see Figure 3). Quarter-on-quarter productivity growth was driven by a 1.0% increase in GVA, with no change in hours worked.
In Quarter 4 2021, output per hour worked was 2.3% above pre-coronavirus pandemic levels, increasing by 1.0% compared with the previous quarter. See Section 3 for more information.
Output per worker was 0.8% above pre-coronavirus pandemic levels in Quarter 4 2021. This is the first time that output per worker has been above the 2019 average since before the coronavirus pandemic period began. This reflects the end of the CJRS with all workers coming off the CJRS.Back to table of contents
Output per hour worked grew by 1.0% on the previous quarter in Quarter 4 (Oct to Dec) 2021. This growth was driven by a 1.0% increase in gross value added (GVA) as hours worked saw no movement quarter-on-quarter. Output per hour worked was 2.3% above the 2019 average.
Hours worked remained 2.4% below the 2019 average level, with no change quarter-on-quarter despite Quarter 4 2021 being the first quarter in the coronavirus (COVID-19) pandemic era to have no workers supported by the Coronavirus Job Retention Scheme (furlough). Quarter 4 2021 was the first quarter since Quarter 1 (Jan to Mar) 2021 not to show substantial growth in total hours worked.
GVA remained 0.2% below below the 2019 average level despite a 1.0% increase quarter-on-quarter. Quarter 4 2021 saw the third consecutive quarter of growth in GVA.
Figure 1 depicts GVA, hours worked and output per hour worked as well as a trendline. The trendline shows what output per hour worked would have looked like if the 2009 to 2019 average had continued. In the decade before the coronavirus pandemic (Quarter 2 2009 to Quarter 4 2019), the trend growth rate of output per hour worked was 0.7% per year. Output per hour worked in Quarter 4 2021 was 0.5% higher than it would have been, had the pre-pandemic trend continued.
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Productivity measured as output per worker diverged away from productivity measured as output per hour worked throughout the coronavirus (COVID-19) pandemic period. This was because of the Coronavirus Job Retention Scheme (CJRS) limiting the change in the number of employees but lowering the total hours worked in the economy.
The CJRS supported an average of 1.42 million jobs in Quarter 3 (July to Sept) 2021, and that number fell to 1.16 million on 30 September 2021, when the policy ended. While many of those coming off the scheme re-entered employment or looked for work, some left the labour force. There are several reasons why people might leave the labour force including retirement, caring responsibilities, or returning to full-time studies.
Quarter 4 (Oct to Dec) 2021 was the first quarter since before the coronavirus pandemic period in which output per worker was above pre-coronavirus pandemic levels. Quarterly growth of 1.1% led to output per worker levels that were 0.8% above the 2019 average. Despite this return to pre-coronavirus pandemic levels for output per worker, gross value added (GVA) is still 0.2% below, and employment is 1.0% below.
In the decade before the coronavirus pandemic (Quarter 2 2009 to Quarter 4 2019), the trend growth rate of output per worker was 0.8% per year. Output per worker in Quarter 4 2021 was 1.1% lower than it would have been, had the pre-pandemic trend continued.
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Total hours worked in the economy were roughly the same in Quarter 4 (Oct to Dec) 2021 as in the previous quarter, despite many workers returning from being on furlough.
Figure 3 shows average weekly hours worked per worker, and an experimental analysis which adjusts for furloughed workers. Since those in furloughed jobs were treated as employed, but working no hours, this supressed the output per worker and average hours worked per worker statistics during the coronavirus (COVID-19) pandemic.
In contrast, if we exclude those on furlough, average hours were higher during the coronavirus pandemic than before. Either workers who worked fewer hours were more likely to be furloughed (a composition effect), or workers who were not on furlough increased their working hours.
In Quarter 4 2021, after the Coronavirus Job Retention Scheme (CJRS) had finished, average hours worked were back to similar levels as before the coronavirus pandemic. The decline in effective average hours worked (adjusting for furlough) in the last two quarters could be because of the previous composition effect unwinding (those working shorter hours returning to work) or a decline in working hours of those who had not been furloughed. Also, Quarter 4 2021 included the initial effects of the Omicron variant of the coronavirus, which may have reduced working hours because of self-isolation and sickness.
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Figure 4 breaks the whole economy into four broadly defined industries. In all these industries, output per hour worked was higher in Quarter 4 (Oct to Dec) 2021 than the 2019 average.
The increase over the 2019 average was driven by lower hours worked levels than gross value added (GVA) levels in all industries. GVA was lower for all industries except the services sector. Hours worked in the non-manufacturing industries were 8.4% lower than in 2019 (the hours sign is reversed in Figure 4) while GVA was 8.0% below.
Productivity growth for the UK can be because of productivity growth within industries or a change in the structure of the economy towards higher-productivity industries. The contribution of the changing structure is a compositional effect, known as a “between-industry” or “reallocation effect”.
In Quarter 4 2021, the contribution of within-industry productivity growth increased for the third consecutive quarter and was larger than the between-industry reallocation effect for the first time since Quarter 3 (July to Sept) 2020. Within-industry productivity growth contributed 1.5 percentage points to aggregate growth since 2019, while industry reallocation accounted for 0.8 percentage points. Throughout the coronavirus (COVID-19) pandemic, output per hour worked was pushed up substantially by a positive allocation effect.
The between-industry contribution remained positive in Quarter 4 2021, as less productive industries are still smaller than they were before the coronavirus pandemic, despite the end of the Coronavirus Job Retention Scheme (CJRS). However, it is substantially smaller than it was earlier in the coronavirus pandemic, and little changed on the size in Quarter 3 2021.
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Flash productivity by section
Dataset | Released 15 February 2022
Flash estimate of labour productivity by section. The latest data are from the gross domestic product (GDP) first quarterly estimate and labour market statistics.
Labour productivity measures how many units of labour input are needed to produce a unit of output and is calculated by dividing output by labour input.
The preferred measure of labour input is hours worked ("productivity hours"), but sometimes workers or jobs ("productivity jobs") are also used.
Output is measured by gross value added (GVA) in chained volume measures (CVM), which is an estimate of the volume of goods and services produced for final use by an industry, and in aggregate for the UK, after adjusting for price changes. It is calculated as turnover (sales) minus purchases (intermediate consumption).
An allocation effect represents changes in the mix of activities in the economy between firms or industries that have various levels of productivity. Resources moving from low to high productivity industries creates a positive allocation effect while movement from high to low productivity industries creates a negative allocation effect.Back to table of contents
This release uses the first available information on output and labour input for Quarter 4 (Oct to Dec) 2021. These data may be revised when we release the more detailed Productivity Overview in April 2022.
This release uses gross value added (GVA) from the gross domestic product (GDP) first quarterly estimate to determine output. Labour market data are from the Labour market overview, UK: January 2021 statistical bulletin. Estimates of the productivity time series for previous time periods have been revised and therefore may not be consistent with the Labour productivity National Statistics.
New estimates of GVA are more volatile on a quarterly basis than previously, especially in production industries. This reflects the use of new data and methods, but also challenges in reconciling quarterly and annual data. As productivity is a structural feature of the economy, we continue to advise users to focus on long-term trends of productivity.
More details on the flash by industry methodology is described in the “Guidance” tab of the dataset.Back to table of contents
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