UK public sector productivity extends post-COVID decline

By David Milliken

LONDON (Reuters) - Productivity in Britain's public sector recorded a year-on-year decline in the three months to the end of September 2024, as the health service struggled to recover from the impact of the COVID-19 pandemic and a wave of industrial action.

Bleak productivity figures in both the public and private sectors in recent years have contributed to stagnant living standards, a rising tax burden and a general decline in public services, including long waits for public healthcare.

Productivity in the public sector - roughly, how much in services the public receive per pound spent - fell 1.4% in the third quarter of last year compared with a year earlier, the Office for National Statistics said. It rose 0.2% compared with the previous quarter.

Healthcare productivity was down by 2.4% on a year earlier, despite the end of strikes by doctors and other health workers after a newly elected Labour government agreed to bigger pay rises than its Conservative predecessor.

Measured productivity in the health service slumped by 39% at the start of the COVID-19 pandemic as routine care was severely disrupted and only partly recovered before falling again due to strikes over pay in 2022 and 2023.

In the third quarter of 2024 it was still 19% below its level in the last quarter of 2019. Since 2019 resources going into public healthcare have increased by 30%, but output has risen only 6%.

For the overall public sector, which is dominated by health and education spending, productivity has fallen 8% since 2019.

Last week the Bank of England said rising employment in the public sector, especially healthcare, appeared to be weighing on overall productivity.

For the economy as a whole, output per hour worked has risen by 2% since 2019.

Public sector productivity is not a direct measure of how hard staff work. Instead it reflects the ratio of input costs - including wages, materials and rents - and output, which can be hard to measure as most public services do not have prices.

(Reporting by David Milliken, editing by Andy Bruce)

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