Over 50 percent of office workers use sites like Twitter and Facebook for personal use during the working day, and admit wasting an average of 40 minutes a week each.
One in three of the 1,460 office workers surveyed also said that many people even post sensitive company information on social networking sites, leading to fears about how workers use the Internet.
Philip Wicks, consultant at Morse, the IT services and technology company who commissioned the survey, said the true cost to the economy could be substantially higher than the 1.38bn pounds estimate.
"When someone is asked for their own use they say around 40 minutes a week, but when asked about their colleagues they say they say up to an hour a day. We have used the lower of those figures rather than the high point," the Telegraph quoted him as saying.
"It is the sort of thing people constantly use which means that its not quite the same as doing a crossword, where you spend half an hour on it and it is finished.
"When it comes to an office environment the use of these sites is clearly becoming a productivity black hole.
"Social networking can be a cause for good when it is used professionally but I think organisations need to wake up - that is not the way it is always being used," he added.
Three fourth of the office workers surveyed said that their employer had not given them any specific guidelines on how to use Twitter.
However, 84 per cent believed it should be up to them what they post online.