Government employees recorded just a 0.1 per cent productivity improvement in the third quarter of 2025 compared with the same period a year earlier, despite strong wage growth across the public sector.

The marginal increase comes as public sector pay has risen sharply, with average regular earnings climbing 7.9 per cent over the past 12 months, representing the fastest rate since records began, data from the Office for National Statistics shows (ONS).

The public sector workforce has also expanded since Labour took office following the 2024 general election, with headcount increasing by 88,000 staff.

Official data highlights the relationship between increased staffing levels, higher wages and overall output across Government-funded services.

Since 2019, spending on public services including education, health and defence has increased by more than 20 per cent, while measured output has risen by 14 per cent over the same period.

The ONS has also revised previous productivity estimates.

The statistics body now estimates public sector productivity grew by 0.8 per cent in 2023, compared with the previously reported 0.9 per cent.

Revised data also shows productivity remained flat in 2024, instead of the previously estimated 0.3 per cent growth.

The updated figures suggest public sector productivity remains below pre-pandemic levels, according to ONS analysis.

Andrew Goodwin, chief UK economist at Oxford Economics, said: “It seems to be a widespread issue — it is not that any one particular part of the public sector is dragging down the average.

“It seems to be a general problem with the approach. That then becomes a management issue.”

Mr Goodwin added: “Part of the problem is a culture of believing there is lots of waste but it is not waste that is the issue, it is just inefficiency.”

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Public sector employment remains a significant part of the UK labour market.

Around 6.2 million people currently work in the public sector, with NHS staff accounting for more than two million workers, compared with 1.6 million around a decade ago.

Industrial action pressures also remain across parts of the public workforce.

Junior doctors voted this week to proceed with strike action, seeking a further 26 per cent pay rise on top of a 29 per cent increase already agreed across three years.

Chancellor Rachel Reeves said in the Government’s Spending Review: “Make the public sector more productive and agile, to ensure that it operates more efficiently and at lower cost to the taxpayer while delivering high quality outcomes.”

The Spending Review set out plans aimed at improving efficiency across public services alongside ongoing funding increases.

Mr Goodwin said: “That is not sustainable for the longer term, particularly given the pressures on the public finances.”