U.K. Productivity Challenge Worsens Amid Coronavirus Crisis

The U.K.s already dismal productivity performance worsened in the first quarter as the Covid-19 crisis intensified.

The headline measure of output per hour fell 0.6% in January to March from a year earlier, while output per worker slumped 3.1%, the Office for National Statistics said Tuesday. Unit labor costs climbed 6.2%, the biggest jump since 2006.

Productivity likely deteriorated further in the second quarter when Britain felt the full force of government coronavirus restrictions on activity and many employees were either furloughed or working from home. The country went into lockdown on March 23. Data for April to June will be published on Oct. 7, the ONS said.

The governments furlough program has caused a disparity between output per hour and output per worker, which typically are closely aligned, by causing employment to stay in line with pre-pandemic levels, whereas hours worked have fallen. Output per hour was hardest hit in real estate activities, with a slump of 10.5%.