This is a short video looking at Labour Productivity up to the fourth quarter of 2012.
Productivity measures how much the economy is producing per unit of input. In this podcast we look at labour productivity, output is measured by gross value added, but there are three ways to measure labour input.
The first measure is Output per worker, which measures how much each person working produces. The second is Output per job, which measures productivity for each job role. Workers and jobs can differ because a worker can have more than one job.
Finally productivity can be in terms of output per hour, which measures how much output is created for each hour worked in the economy. We will be focussing on this measure of productivity in this podcast.
We will start by looking at output per hour over the period from 1990 to 2012. Before the recession started in the second quarter of 2008 output created per hour had been rising. So the amount produced each hour had been increasing. Since the onset of the recession labour productivity has dropped and remains lower than pre-recession levels
Now we will look at how the 2008 recession compares with previous recessions . At the onset of previous recessions, we see a drop in output per hour. After 5 quarters we then see a recovery back to pre-recession levels.
However in the 2008 recession we haven’t seen the same pattern of recovery.
Output per hour remains below its pre-recession level because whilst output is yet to recover, labour inputs have been steadily increasing. This is known as the ‘Productivity Conundrum.’
Looking at output per hour on a regional basis, we can see some differences. The x-axis shows the percentage difference from the UK average output per hour.
The north produces less output per hour than the south on this measure.
We can see that London has outperformed the UK average output per hour by nearly 30%, with the South East also higher.
Across countries, Scotland has the same hourly productivity as the UK average, with England just above. Northern Ireland and Wales are around 15% below.