Bad news for the UK: Productivity gap widens

[Thanas]

http://www.theguardian.com/business/201 ... ords-began

UK productivity gap widens to worst level since records began

Growing difference means UK workers produce 18% per hour less than the G7 average with 36% less than German workers and 31% less than French

Britain’s poor productivity record has been highlighted by government figures showing the biggest gap with other leading western economies since modern records began in the early 1990s.

Output per hour worked in the UK was 18 percentage points below the average for the remaining six members of the G7 group of industrial nations in 2014, the Office for National Statistics said.

The gap – up one percentage point on the previous year – was the widest since 1991 and showed a particularly marked deterioration since the onset of the financial crisis and deep recession of 2007-09. The shortfall was slightly smaller than the 20-point gap reported in the ONS’s preliminary estimates released in September 2015.

In the first half of the 2000s, the UK narrowed its productivity gap with the rest of the G7 to just 4 percentage points but the period since has seen that trend go into reverse.

The ONS’s final international estimates of productivity in 2014 found that output per hour in the UK was now 36 percentage points behind that in Germany - the biggest gap ever recorded with a fellow G7 country and up two points on 2013.

Britain had a 30-point productivity shortfall with the US in 2014 - up three points on the previous year - and an unchanged 31-point gap with France. Only Japan of the G7 countries had a worse productivity record, the ONS said.

The comparisons found that UK productivity was lower than that in the US in every sector of the economy, but was most evident in manufacturing. In the service sector, there had been a sharp deterioration in both financial and non-financial services since 2009.

Productivity among all the G7 countries deteriorated since the so-called Great Recession, but the ONS said Britain had been hit hardest. Productivity was now 14 points below where it would have been had the pre-crisis trend continued – approximately twice the average for the rest of the G7.

Data for 2015 has shown that a pick-up in productivity stopped in the final three months of the year, when the number of hours worked rose more quickly than the output of the economy.

The new data also compares UK output per hour with some of the smaller European economies - Ireland, Spain, Belgium and the Netherlands - with the record equally unimpressive.

Britain has a 5 point productivity gap with Spain, a 30-point gap with Ireland, a 34-point gap with Belgium and a 45-point gap with the Netherlands.

The ONS said that on its alternative measure of productivity – output per worker – the UK had a 19-point gap with the rest of the G7.

The TUC general secretary, Frances O’Grady, said: “For all the good news on rising employment, the UK is still not creating enough quality jobs.

“The yawning productivity gap between us and other countries shows how much room there is for us to do better.

“The loss of middle-income jobs, in vital industries like steel, is holding the economy back and dragging down pay.”

Britain now less productive than Spain.

[Crazedwraith]

Well we've been killing our industry for ages. And financial service have taken a hit with the recession so yeah.

Are we still doing a lot better than Spain employment levels wise though? It's just all our jobs are unproductive.

[Tribble]

Britain now less productive than Spain.

Spain, with a population of ~47 million has a ~21% unemployment rate. The UK, with a population of ~64 million, has an unemployment rate of ~5.1%. While it's accurate to say that Britain is les productive per person, there are far more people working overall. Does this statistic take into account the unemployed?

IMO we have to be wary with viewing statistics like this on their own because they could end up being misleading. Sure, Spain is more productive per person, but for the average person that doesn't mean much, and if you're in the 1/5 can't find any work at all, it sucks to be you.

[Thanas]

Does this statistic take into account the unemployed?

No.

[Starglider]

He's just mad that the UK is now beating Germany (and France and Spain) in GDP per capita (as of the latest IMF figures).

If the UK was leading on productivity he'd be complaining about how the UK's pathetically low sauerkraut production marks it as an inexcusably barbaric failed state.

[Thanas]

He's just mad that the UK is now beating Germany (and France and Spain) in GDP per capita (as of the latest IMF figures).

Tbh, given that we just added a million refugees, anything else would be deeply surprising. As to the rest of your trolling, I leave that to other people.

[NecronLord]

He's just mad that the UK is now beating Germany (and France and Spain) in GDP per capita (as of the latest IMF figures).

If the UK was leading on productivity he'd be complaining about how the UK's pathetically low sauerkraut production marks it as an inexcusably barbaric failed state.

Starglider, let's be clear.

General discussion of UK vs German economic statistics & other quality of life indicators: Yes - ideally with more content.
Personal rants based on posters' nationality: No.

Shape up please.

[Tribble]

Does this statistic take into account the unemployed?

No.

If unemployment is not being considered, what does this statistic mean in terms of quality of life? For example, under that scenario both the GDP per hour worked per employed person and the unemployment rate can rise at the same time.

Let's say I have a factory that currently employs 1,000 people, and I'm able to cut 900 of those jobs while maintaining the same output, assuming everything else remains the same my remaining employees would be 10x more productive than my old ones, which would be reflected in that statistic. However, I would have laid off 90% of my workforce, would also increase unemployment (until they find equivalent replacement jobs).

And/or you could have a scenario where the GDP per hour per person worked increases simply because the employer decides to crack out the whips and make employees work harder. I'm assuming that high productivity in places like Germany and France is generally because of incentives rather than whips, which make the employees highly motivated to work harder, but I'm just pointing out that's not the only way to make GDP per hour worked go up.

If large sectors of the economy keep undergoing those kinds of processes, you could see how such a statistic could mislead people into thinking that the overall quality of life in a society has improved, even though that may not be the case for most people. IMO while this particular statistic may have its uses, it really needs to be placed in context with other quality of life indicators.

[madd0ct0r]

Optimistic interpretation: lots of new hires are still learning the ropes. Soon unemployment will stop decreasing and productiivty increase

Realistic interpretation: no investment for future during recession still coming home to roost now. Part time or zero hour contract workers less productive due to greater friction between their multiple roles taking up energy. Structural shift in the economy away from established productive jobs (like steel making) to jobs that are more profitable, even though less useful overall (call centres). Result of perverse incentives in economy.

possible interpretation: uk workplace culture is lazy and resistant to improvement.

[Tribble]

Optimistic interpretation: lots of new hires are still learning the ropes. Soon unemployment will stop decreasing and productiivty increase

Realistic interpretation: no investment for future during recession still coming home to roost now. Part time or zero hour contract workers less productive due to greater friction between their multiple roles taking up energy. Structural shift in the economy away from established productive jobs (like steel making) to jobs that are more profitable, even though less useful overall (call centres). Result of perverse incentives in economy.

possible interpretation: uk workplace culture is lazy and resistant to improvement.

While possible, IMO the ladder isn't likely given that Japan's GDP per hour worked is considerably lower than the UK's despite the people there being worked to the point where Karōshi (death from overwork) is a serious problem.

[mr friendly guy]

He's just mad that the UK is now beating Germany (and France and Spain) in GDP per capita (as of the latest IMF figures).

If the UK was leading on productivity he'd be complaining about how the UK's pathetically low sauerkraut production marks it as an inexcusably barbaric failed state.

Nitpick. The latest IMF figures are predictions made in late last year. The figures for 2015 will be released in April of this year. In other words they might not be the same when final figures come out and the latest IMF figures are predictions only.

And on another note, mighty Australia still has a higher GDP / capita than all of you Europeans. Baw ha ha ha.

He's just mad that the UK is now beating Germany (and France and Spain) in GDP per capita (as of the latest IMF figures).

Tbh, given that we just added a million refugees, anything else would be deeply surprising. As to the rest of your trolling, I leave that to other people.

I think the fall in GDP / capita is due the drop in the value of the Euro Thanas, rather than the fact that you guys took in a million refugees.

[K. A. Pital]

He's just mad that the UK is now beating Germany (and France and Spain) in GDP per capita (as of the latest IMF figures).

If the UK was leading on productivity he'd be complaining about how the UK's pathetically low sauerkraut production marks it as an inexcusably barbaric failed state.

Why would he be mad? The US has a higher GDP, but it's living standard is abysmal by the standards of Europe. Not everything is measured by "GDP" figures.

Hope after your lot gets kicked out of the EU you lose the freedom of travel, residence and employment associated with EU membership. Enjoy while it lasts.

I also think that the World Bank figures are more sound... And they seem to dispel the "UK beating Germany in GDP per capita", especially when PPP figures are inspected. It is not a matter of the UK being barbaric, more like a matter of your industrial sector not coping with triple competition: developed EU nations, Eastern Europe and newly industrialized Asia.