ICT & Productivity
ICT use is linked to higher productivity
Labour Productivity: by Employees using ICT in Manufacturing and Services
Investment in computers and software by firms, Information and Communication Technologies (ICT) and internet use by employees, as well as e-commerce activity, are associated with higher value added per worker.
Hardware and software capital in UK firms increases productivity right across manufacturing and service industries, after taking account of other factors. In addition to the effect of investment, the use of computers, communications and e-commerce also has a positive association with productivity across UK industry.
Extra productivity gains are identifiable, associated with more widespread use of computers by employees within firms.
Manufacturing companies in the UK achieve an extra 2.2 per cent in productivity for each additional 10 per cent of employees using computers. In newer firms, this extra productivity effect rises to 4.4 per cent.
The effect associated with internet use is greater. Manufacturing companies in the UK achieve an extra 2.9 per cent in productivity for each additional 10 per cent of employees using the Internet. Again, for newer firms the effect is larger.
US owned firms in the UK are more successful in exploiting Information Technology (IT) compared to all other firms, and IT accounts for much of their productivity advantage. This is consistent with recent ONS data on international productivity comparisons, which show higher output per worker for the US compared to other G7 economies.
Notes: Some of this analysis was carried out with the Centre for Economic Performance at the London School of Economics and sponsored by the Department of Trade and Industry.
It was conducted in ONS’ Business Data Laboratory, which stores and links survey information on individual businesses under strict confidence. The laboratory is used for research on business behaviour and performance, by approved researchers, bound by security and non-disclosure conditions to protect data.
Firm level source data for the analyses above include - ABI survey information on sales and value added, employee numbers, pay, general investment, e-commerce and purchases of IT and telecoms services - Capex survey information on investment in IT - LFS information on skills by area and sector - FDI survey information on ownership and multinational links, - E-commerce survey information on employee and business use of computers, and use of e-business activity.
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