A recent report examines the changes in labour productivity during and after the COVID-19 pandemic, specifically noting the “productivity bubble” that occurred from January 2020 to March 2022, followed by a phase of decline. Dr. Alex Robson, deputy chair of the commission, likened the productivity journey during the pandemic to a rollercoaster ride, now asserting that the situation has returned to a stagnant norm.
During the peak of the productivity bubble, productivity increased as industries that were severely affected, such as accommodation and food services—which typically experience lower productivity—saw a workforce shift towards more productive sectors. This transition contributed to genuine productivity growth from December 2020 to March 2022, coinciding with an improvement in worker output and a recovering labour market.
However, following this period, the report highlights a subsequent “productivity loss” phase from June 2022 to June 2023. It concluded that the investments necessary to enhance productivity, such as equipment and resources, did not keep pace with the increased hours worked post-lockdowns. Staff were working longer hours without adequate support, which hindered their productivity. Additionally, many less experienced employees had entered the workforce after enduring extended lockdowns, contributing further to this decline.
Interestingly, the report found that working from home was not a significant factor in the productivity downturn. While fully remote work without any in-person interaction can reduce productivity, hybrid work models seem to enhance job satisfaction and employee retention, potentially benefiting productivity. The prevalence of working from home has drastically increased from 12% at the pandemic’s onset to 36% by August 2024. Nonetheless, the report indicates that younger workers could benefit from more face-to-face interactions.
The report concludes that while hybrid work generally maintains or may even enhance productivity, transitioning towards hybrid models has not been responsible for the observed productivity losses. Dr. Robson pointed out that the main takeaway from this productivity bubble is the recognition that there are no easy solutions to enhancing productivity. He highlighted the necessity for concerted reform and effort from both businesses and the government to address this productivity challenge. The commission will forward the findings of five inquiries related to this issue to the government later this year.