It’s entirely possible to get lost in a minefield of disinformation about productivity figures. Changes in the short term numbers can be horribly hard to figure out. Is productivity growth slowing because we’re heading for a recession? Is strong growth just because we’re coming out of one? Or given that our economy is more service based than most, should we simply accept that we’ll have low growth?
What about public sector v. private? Depending on how you calculate the figures, productivity is actually falling (or not, or rising very slowly using hedonic figures, ie, including the increase in quality of treatment) in the NHS. Most convenient for health ministers that new method of calculation, of course.
There’s also the problem of how productivity is actually calculated: it’s the balancing figure after everything else is taken into account. Even, everyone talks about labour productivity and it’s really multi-factor that we should concern ourselves with.
Then we have all of those studies showing that the French or whoever have higher labour productivity per hour than we do. So therefore there must be something better about the French labour market (ho, ho).
To see what I mean:
"The overall productivity performance has been
disappointing in recent years," said Howard Archer, chief European
economist at Global Insight.
"A number of
factors have been advanced to explain the UK’s overall recent lack of
progress in raising productivity. These include: relatively limited
business investment in recent years, relatively low research and
development expenditure, the recent diversion of resources to the
public sector, infrastructure bottlenecks, and education
inefficiencies.
It’s not a simple thing. However, in the long term it’s supremely important. I think it was Paul Krugman (and I paraphrase) who said "productivity isn’t everything but in the long term it’s almost everything".
The efficiency with which we use resources (the flip side of productivity) is the determinant of our wealth. The determinant.
Still, one line to show up why those numbers from the various French studies do not show their labour market to be more efficient than ours:
"In addition, the high level of employment in the UK means that less productive workers are also able to get jobs."
That’s why France (and many other places) has higher labour productivity per hour worked. Because, in their system 20-25% of the young, 50% of the immigrant young in places, simply don’t have jobs at all, and are thus not included in the figures. In our system just about any and every scrote is employed doing something, reducing the average per hour, but boosting the whole.
It’s simply a mathematical artefact. You can boost the average of pretty much anything if you chop out the lowest 20% before you calculate it.
Leave a Reply