This section presents first estimates of labour productivity of the G7 countries relative to the UK in 2010. The measures reported are Gross Domestic Product (GDP) per worker and GDP per hour worked in common currency terms. These two approaches can yield different results, reflecting differences in working patterns across countries.
GDP per Worker ( see Table 1 (33 Kb Excel sheet) )
First estimates for 2010 show that UK GDP per worker was:
above that of Japan;
similar to that of Canada and Germany;
lower than that of Italy, France and the US, which continues to lead the G7 countries;
lower than the average of G7 countries excluding the UK.
Between 2009 and 2010 productivity of the UK weakened relative to all G7 countries except Germany and Italy. The UK improvement compared to Italy largely reflects relative price movements in the two countries.
The productivity gap between the UK and the US was nine percentage points larger in 2010 than in 2006; most of the divergence occurred in 2009 and 2010, reflecting differences in the behaviour of the labour markets during the recession. The gap is now at its largest level since 1994.
GDP per Hour Worked ( see Table 2 (33 Kb Excel sheet) )
On this basis, UK productivity in 2010 is:
above that of Japan and Canada;
similar to that of Italy;
below France, Germany, the US and the average of the G7 countries excluding the UK.
UK relative labour productivity on an hourly basis was unchanged compared with the average of the other G7 countries in 2009, but improved relative to Italy and Germany.
This section presents productivity growth since 1991 for the G7 countries, including first estimates for growth in 2010.
GDP per worker ( see Table 3 (33 Kb Excel sheet) )
All G7 countries, including the UK, observed growth in GDP per worker in 2010. This growth came about despite an increase in the measure of workers in the UK, Germany and Canada. UK productivity growth was the lowest of the G7 countries by this measure, while Japan, France and the US achieved the highest growth.
Since 2004 the US has shown the largest growth of all G7 countries. Prior to this, between 1991 and 2004, the UK experienced the fastest growth of all G7 countries. The US was the only country to experience no fall in GDP per worker between 2007 and 2009, the years surrounding the global recession. Over the same period the UK experienced a similar fall to Canada, France and Germany as employment initially fell more slowly than GDP.
GDP per hour worked ( see Table 4 (33 Kb Excel sheet) )
All of the G7 countries demonstrated positive growth in GDP per hour worked in 2010. The UK growth in GDP per hour worked resulted as a combination of a fall in actual hours worked per worker and an increase in GDP. The UK was the only G7 country to experience a fall in the measure of hours worked per worker between 2009 and 2010, while various countries demonstrated a reduction in total hours due to lower employment.
On this measure the UK’s cumulative growth over the period 1991 to 2004 exceeded that of all other countries under comparison. However, between 2004 and 2010, growth in GDP per hour worked for the UK was slower than the average of the G7 countries excluding the UK.
Data covering the period 1990 to 2009 have been subject to revision in this Bulletin. The sources are:
Revisions to purchasing power parity (PPP) estimates for Japan for 2009
Revisions to GDP at current prices for France for the entire period, the US from 2003 to 2009, and Canada, Italy and Japan for 2008 and 2009
Revisions to GDP at constant prices for France and Japan for 1990 to 2009, the US for 2002 to 2009 and all other countries for 2007 to 2009
Upward revisions to French employment for 1990 to 2009 and downward revisions to Canadian employment for 1996 to 2009
Upward revisions to actual hours worked per worked for Canada throughout the entire period
Note that because Tables 1 and 2 are indexed to the UK = 100, revisions to the UK are zero by definition. Thus, revisions to other countries may represent a combination of revisions to UK data and other countries’ data.
The revisions presented in Tables R3 and R4 compare the latest data with the underlying data from the previous release on 15 February 2011 rebased to 2004.
The revisions presented in the tables arise from a combination of revisions to the input data cited above. However, none of the revisions mentioned above substantially change either the relative levels of productivity (Tables 1 and 2) or the growth rates of productivity (Tables 3 and 4) in those years where revisions occurred.
ONS publishes ICP biannually, in spring and autumn, providing comparisons of GDP per worker and GDP per hour worked across the G7 countries, in both levels (current PPPs) and growth rates (constant PPPs). This release cycle reflects the publication and revision cycles of the component data series.
Further details about the international comparisons of productivity methodology, the compilation process, and a detailed analysis of past revisions, can be found via this page.
ICP estimates are published to the nearest whole number. However, differences of a few percentage points between the productivity estimates for individual countries should not be seen as significant because of the difficulties in obtaining directly comparable data across countries.
For constant PPP-based ICP estimates, data for all countries are indexed to 100 in 2004, enabling comparisons of productivity growth relative to this reference period for any given year. In this release 2004 has been selected as the reference period as it corresponds with a low discrepancy between the UK and G7 productivity levels, and allows clearer comparison within the most recent periods.
To derive an index for each country relative to the UK (=100) in current PPP terms, the derived labour productivity measure for each country in each year is divided by the UK estimate for that year and multiplied by one hundred. Numbers in excess of 100 indicate that productivity is higher in that country compared to the UK. Numbers below 100 indicate that productivity is higher in the UK.
International comparisons of productivity levels use current PPPs, which measure the relative price across countries of a basket of goods and services. Since this representative basket of goods and services changes over time, current PPP-based ICP estimates are suitable only for point in time estimates, and should not be used for time series or growth analysis.
Data sources for this bulletin are as follows: GDP from the OECD Main Economic Indicators, August 2011; Purchasing Power Parity (PPP) estimates from the OECD PPP web site (updated continuously); employment from the OECD Annual Labour Force Statistics, January 2011; average hours worked from OECD Employment Outlook, July 2011.
Due to a break in the series currently available from the OECD, UK employment and hours data have been derived directly from the latest Labour Force Survey data, following the OECD method of compilation.
The output measure used here (GDP at market prices) differs from that used for the ONS headline measure of productivity (Gross Value Added (GVA) at basic prices). Although GDP and GVA are equivalent at the whole economy level, there is a difference between market prices and basic prices: basic prices exclude the taxes and subsidies placed on products, taxes and subsidies on imports and trade and transport costs. As the OECD does not produce output level series using basic prices over the necessary time period, market prices are used here.
GDP data for each country in local currency prices are converted using PPPs to make them internationally comparable. GDP at purchasing power parity is effectively a relative volume measure of GDP. For each country, GDP at purchasing power parity is divided by either an employment or total hours worked measure to produce a labour productivity estimate.
To compare growth rates of productivity between countries, constant PPP-based ICP estimates are used. These measures fix GDP at purchasing power parities to a base year for each country, then extrapolate forwards and backwards by applying annual volume growth rates for each country to produce comparable measures of output for each year. This allows for intertemporal analysis as the price structure of constant PPPs does not vary over time – only volume changes are captured in the ICP data. For this release the base year is 2008, which is the latest year for which OECD PPP series have been benchmarked; subsequent PPPs
Using the constant PPP approach is not necessary for calculating volume growth for any given country, but is necessary for calculating growth for the G7 group as a whole. Further details on the methodology can be found here.
The OECD also publishes international comparisons of GDP per hour worked. The differences between the ONS and OECD series are not large. They can be explained by the different sources used for the component data. In particular, ONS estimates use employment data that are based on countries’ Labour Force Surveys, whereas the OECD uses the National Accounts as the main source of employment data for most countries. There are also slight differences in the GDP data, as the OECD uses the Annual National Accounts, whereas ONS uses the Quarterly National Accounts for GDP data.
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