It's very normal for developers — being as they are in a "knowledge profession" — not to be sat typing away frantically for the exact period of time between 9am and 5.30pm. Creativity must come naturally, and that often involves procrastinating/relaxing during the day; when a burst of ideas comes, that's when the fingers start to fly. It's frustrating that management — not used to such professions — do not understand this. When Facebook and YouTube get blocked, software developer productivity goes _down_.

Having said that, it sounds like your business is made up of exceptionally lazy people. If people are really sitting doing nothing "all day", on a regular basis, then something is wrong.