This article provides experimental statistics of two measures of labour productivity, GVA per hour worked and GVA per filled job, for the NUTS2 and NUTS3 subregions of the UK. The data cover the period from 2002 to 2012. Productivity measures the amount of output produced by a unit of input and is a key indicator of the economic performance of a subregion.
The data in this report measure labour productivity. Labour productivity measures the amount of output produced by unit of labour input. A higher level of productivity means that a higher level of output is being produced per unit of labour input.
Productivity matters because increasing productivity is key to increasing economic growth. This follows from the fact that economic output can only be increased by either increasing the amount of inputs or by raising productivity. Increasing productivity is, therefore, an aim of economic policy both nationally and locally. As shown in the ‘Results’ sections in this report, there is currently a wide spatial divergence in levels of productivity between different subregions.
There are various different ways of measuring labour input, such as jobs, workers or hours worked. The choice of which labour input measure to use depends on what question is being addressed and what data are available. Additionally, there is an established preference hierarchy of the labour productivity measures based on the information each measure provides to users. The preferred measure is the GVA per hour worked, which is therefore the measures this release focuses upon. More details are given in the section ‘Comparison of Labour Productivity Measures and GVA per Head’.
In calculating subregional productivity, published ONS data on regional GVA has been used. It should be noted that there were a number of methodological changes made to the calculation of regional GVA in the most recent Regional GVA data release. In particular, the development of independent residence and workplace estimates of Compensation of Employees (CoE) for the NUTS1 regions. This led to some revisions to NUTS1 workplace estimates of regional GVA which in turn fed through to revisions in the NUTS2 and NUTS3 workplace GVA data.
Also, in the most recent regional GVA release only unsmoothed data were published. This, however, had no impact on the subregional productivity estimates published in this release. Like in previous subregional productivity releases, GVA per hour worked and GVA per filled job by NUTS2 and NUTS3 subregions are calculated from unsmoothed GVA data. A smoothing process in then applied (see methodology section of this release for more detail); and it is these final smoothed productivity estimates that are discussed and presented in this release. For any users who would like to make use of unsmoothed subregional productivity results, these data are included in the data section of this publication.
This section presents the main results of the labour productivity estimates for the 37 NUTS2 subregions of the UK, focusing on estimates of nominal GVA per hour worked. The data have been smoothed based on a five year weighted average (see background notes for more information).
Figure 1 shows the 10 UK NUTS2 subregions with the highest GVA per hour worked in 2012. It shows that amongst these NUTS2 subregions with the highest levels of productivity in the UK, six are in the Greater South East of England (London, the South East and the East of England) and two are in Scotland.
In the London region, Inner London showed the highest productivity level, with a GVA per hour worked 47% above the UK average. Although Outer London had a much lower GVA per hour worked (9% above the UK average), it is still among the 10 NUTS2 subregions with the highest levels of productivity. In the South East region, Berkshire, Buckinghamshire and Oxfordshire had the highest productivity level, with a GVA per hour worked 18% above the UK average. Surrey, East and West Sussex (with a GVA per hour worked 6% above the UK average), and Hampshire and Isle of Wight (with a GVA per hour worked 3% above the UK average) were also amongst the 10 NUTS2 subregions with the highest productivity levels. With a GVA per hour worked 5% below the UK average, Kent was the only NUTS2 subregion in the South East underperforming the UK average.
In Scotland, two out of four NUTS2 subregions were also among the 10 subregions with the highest economic performance in the UK: North Eastern Scotland, with a GVA per hour worked 18% above the UK average, and Eastern Scotland, with a GVA per hour worked 1% below the UK average. Cheshire, in the North West of England, Bedfordshire and Hertfordshire, in the East of England, and Gloucestershire, Wiltshire and Bristol/Bath in the South West also performed well, achieving productivity levels above the UK average.
Figure 2 shows the 10 UK NUTS2 subregions with the lowest GVA per hours worked in 2012.
The 10 NUTS2 subregions showing the lowest GVA per hour worked had productivity levels at least 16% below the UK average. These NUTS2 subregions are located across all countries/regions of the UK, except in the Greater South East (London, the South East and in the East of England) and the North East. Cornwall and Isles of Scilly, Lincolnshire, and West Wales and The Valleys showed the lowest productivity in 2012, with a GVA per hour worked 20% or more below the UK average.
This section presents the results of the labour productivity estimates for the 134 NUTS3 subregions of Great Britain1, focusing on the data for nominal GVA per hour worked, which is the preferred subregional labour productivity measure. The data have been smoothed based on a five year weighted moving average (see background notes for more information). An interactive map showing the smoothed data by NUTS3 is also available.
Figure 3 shows the 15 GB NUTS3 subregions with the highest GVA per hour worked in 2012.
Inner London NUTS3 subregions had the highest productivity levels, with GVA per hour worked 55% above the UK average in Inner London West and 34% above the UK average in Inner London East. From the Outer London NUTS3 subregions only Outer London West and North West, with a GVA per hour worked 16% above the UK average, was among the fifteen NUTS3 subregions with the highest productivity.
Outside London, GVA per hour worked was highest in Berkshire, and Buckinghamshire (both in the South East region) followed by Aberdeen City and Aberdeenshire in Scotland. Two further subregions of the South East (Surrey and Milton Keynes) also had productivity levels 15% or more above the UK average.
Figure 4 shows the 15 GB NUTS3 subregions with the lowest GVA per hour worked in 2012.
The 15 NUTS3 subregions showing the lowest GVA per hour worked had productivity levels at least 24% below the UK average. From these 15 NUTS3 subregions, five are located in Wales, five in Scotland and the remaining five are located either in the North West, the South West or the East of England regions.
Powys in Wales, and Cornwall and Isles of Scilly in the South West of England showed the lowest productivity in 2012, with a GVA per hour worked more than 30% below the UK average. In general, it tends to be rural subregions that show the lowest labour productivity levels (the five subregions with the lowest productivity are typically rural), although there are also a few urban areas with low productivity, for example Blackpool.
It should be noted that the very high productivity level in Inner London leads to a skewed distribution of productivity levels across the UK, such that relatively few subregions have productivity levels above the UK (mean) average. In fact, in 2012, just 23 out of 134 NUTS3 subregions across England, Scotland and Wales had a GVA per hour worked above the UK average. Of these, two subregions are in Scotland and the remaining 21 are in England. Of those subregions in England, 14 are in the Greater South East of England, three in the South West, two in the North West, one in the East Midlands and one in the West Midlands.
Given the skewed nature of the distribution, it is worth considering how the productivity level of the mid-ranking (median) subregion compares with the UK average. In 2012, the subregion occupying the middle position in the productivity ranking of the NUTS3 subregions was Bridgend and Neath Port Talbot, with a GVA per hour worked of 90% the UK average; that is, a productivity level that was 10% below the UK mean average. In other words, half of the NUTS3 subregions had a higher productivity level than Bridgend and Neath Port Talbot, while the other half had a lower productivity level.
While the Greater South East (London, the South East and the East of England) had most of its NUTS3 subregions (26 out of 30) in the top half of the distribution, Wales and most of the remaining English regions had a majority of subregions within the bottom half of the distribution. For more detail on the data split by region and country, please see the next section 'Results - NUTS3 by region/country’.
The preceding section provided the data for GVA per hour worked for all NUTS3 subregions of Great Britain. In this section, the same data are shown but organised on a region/country basis. Additionally, GVA per filled job data are shown for Northern Ireland. An interactive map showing the smoothed data by NUTS3 is also available.
Figure 5 shows GVA per hour worked data for 2012 for all NUTS3 subregions within the South East region of England. It shows a wide variation in productivity across the subregions. Similar, charts for the remaining English regions and also for Scotland and for Wales can be found by opening the excel spreadsheet beneath figure 5.
As mentioned previously, GVA per hour worked data are not available for the NUTS3 subregions of Northern Ireland. However, GVA per filled job data is available. Figure 6 shows this GVA per filled job for the NUTS3 subregions of Northern Ireland in 20112.
In 2011, Belfast was the subregion of Northern Ireland with the highest productivity, with a GVA per filled job 8% below the UK average. GVA per filled job was lowest in the subregions covering the North, the West and South of Northern Ireland, where the productivity levels were 23% or more below the UK average.
When comparing the performance of the Northern Ireland NUTS3 subregions with the rest of the UK, Belfast was ranked 40th out of the 139 NUTS3 subregions. All the other NUTS3 subregions of Northern Ireland were on the bottom half of the productivity rank, with East of Northern Ireland the next highest (ranked 87th).
Employee jobs data used to calculate GVA per filled job are not available for 2012 at the time of this publication.
The previous sections have focused on cross-sectional analysis of the subregional productivity data. However data presented in this publication cover a period of 9 years and, subject to the caveats detailed below, it is also possible to look at the variation in the data over a period of time. This section focuses on the time series analysis of the subregional productivity data to look at the economic performance of the NUTS2 subregions over this period of time.
Caution is needed when carrying out a change over time analysis of the subregional productivity data. Particularly for NUTS3 data, there is volatility in the data that arises from the smaller survey samples inherent within estimates for smaller geographic areas. It is for this reason that smoothed subregional productivity data is presented in this article. The smoothed data reduce the volatility by using weighted data from up to five years in producing the estimate for each year.
When using this smoothed data for time-series analysis, examining a particular year-on-year change does not really make sense, because each year’s data are already a weighted average of a number of different years. Therefore, to examine a year-on-year change, for example from 2011 to 2012, the only suitable method would be to use the unsmoothed data that are available in the accompanying reference tables. However, because of the volatility of the data, this year-on-year change may well be due to the volatility arising from the sample errors, as opposed to a ‘true’ change in the data. Furthermore, in the absence of confidence intervals for the subregional productivity data, it is very difficult to determine which actually the case is.
In view of this, time series analysis of the subregional productivity data is better done over a longer period of time. Trends over a longer period of time are less likely to be the result of the volatility around any single year estimate and more likely to be showing a change in the economic performance of the subregion. Such a trend should show up in the smoothed data, as well as the unsmoothed data, so using the smoothed data is appropriate when considering the trend over the full data time series.
When looking at changes over time, it is also important to keep in mind that the productivity data in this publication are presented as indices rather than the actual GVA per hour worked or GVA per filled job. The productivity index shows how well a subregion has performed compared with the rest of the UK, that is, the UK average (100). Therefore, a decrease in the productivity index number of a subregion does not necessarily mean that the subregion’s productivity has decreased in actual terms; it rather means that the subregion has performed relatively worse than the rest of the UK over the period. In other words, its actual productivity level may have improved, but at a slower rate than the UK overall, thus declining relative to the UK=100 index. Similarly, an increase in the productivity index number means that the subregion has performed better than the rest of the UK.
Figure 7 shows the change in productivity of the five NUTS2 subregions with the best and the worst economic performance relative to the UK average between 2004 and 2012.
Between 2004 and 2012, GVA per hour worked (in GB sterling) increased in all NUTS2 subregions, but in some more than in others. So while some NUTS2 subregions performed better than the UK average (reflecting an increase in their productivity index), other subregions performed worse than the UK average (reflecting a decrease in their productivity index).
North Eastern Scotland had the highest increase in the productivity index; it increased from 10% to 18% above the UK average between 2004 and 2012. Hampshire and Isle of Wight in the South East, Merseyside in the North West and Inner London have all improved their economic performance, showing a three percentage points increase in their productivity index. Other subregions have also performed better than UK average, although to a much smaller extent. This was the case of Cheshire in the North West that increased its productivity index from 5% to 6.5% above UK average between 2004 and 2012.
In some other regions, GVA per hour worked increased less than the UK average, leading to a decrease in the productivity index. GVA per hour worked in North Yorkshire fell from 9% below the UK average in 2004 to 18% below UK average in 2012, the largest decrease among UK NUTS2 subregions. This was just followed by Cornwall and Isles of Scilly; and Bedfordshire and Hertfordshire with a decrease of six percentage points in the productivity index during the same period.
GVA per head has historically been, and often still is, used as a catch-all indicator of a subregions economic performance. However, there are some significant drawbacks to using GVA per head in this manner which are discussed below. Therefore, it is considered better to use a suite of different indicators, including the productivity measures published in this article, when assessing the economic performance of regions and subregions.
In the ONS Productivity Handbook, published in 2007, it is stated that 'GVA per head does not provide a good measure of economic productivity of a region or the wellbeing of those living in the region.' This point was further reinforced by the National Statistician in an article (1.06 Mb Pdf) published in January 2009. The article aimed to inform the discussion about the limitations of GVA per head in measuring productivity of a region and the income of its residents, and to promote the use of GVA per hour worked and GVA per filled job as regional productivity measures.
GVA per head is calculated as the simple ratio of economic activity in a region divided by the number of people living in that region. At first sight, GVA per head appears to be an appropriate indicator of productivity as it compares the output of a region (GVA) with an input (population).
However, there are two main limitations in this measure that makes GVA per head unsuitable as a regional productivity measure. Firstly, by including all the residential population and not just those who are in employment, the denominator includes residents who are not directly contributing to GVA. GVA per head is therefore understated in areas with high percentages of young people and pensioners. Secondly, the GVA per head is dividing a workplace-based numerator (GVA) by a residence-based denominator (residential population). This means that this measure does not account for people commuting into and out of a region.
For these reasons, GVA per hour worked and GVA per filled job are the most appropriate measure of regional and subregional productivity. These measures only count the input of those who are directly employed in the production process (rather than the whole population) and additionally, they provide a workplace-based labour input denominator to match the workplace-based GVA numerator, thus fully accounting for the impacts of commuting.
The differences in the results of the subregional labour productivity and GVA per head are not negligible. They can be particularly large for subregions that have large commuting flows.
GVA per hour worked and GVA per filled job can both be used as measures of labour productivity, but these two measures are different. GVA per hour worked apportions GVA to the total hours worked by the workforce; GVA per filled job apportions GVA to the number of jobs in the subregion.
There will be some small differences between the results for the two measures. This occurs because the average of hours worked per job varies from subregion to subregion as a result of differences in labour market structure and working patterns. For example, a subregion with high levels of part-time employment will tend to have lower average hours worked.
GVA per filled job does not take into consideration regional labour market structures or different working patterns, such as the possible of mix of part-time and full-time workers, home workers and job share availability. For this reason, GVA per hour worked is a more comprehensive indicator of labour productivity and the preferred measure at sub national level.
Note that GVA per hour worked data are currently available for the period 2004-2012 and GVA per filled job data are available for the period 2002-2011.
The subregional productivity data in this article have been compiled to be consistent with the regional productivity data published in the ONS Labour Productivity Statistical Bulletin on the 24 December 2013.
Both regional and subregional productivity measures are produced by ONS on a nominal basis only. In other words, there is no separation of volume and price in the final output. As such, different levels of nominal productivity across different subregions will be impacted by any difference in prices between these subregions, in addition to differences in production volumes per input.
Data accompanying this article are based on the NUTS geographical classification that came into use on 1 January 2012. More information on this is available in the background notes section.
Regional productivity data are published by ONS in the ‘Productivity Measures by Region’ table, which is included in the quarterly Labour Productivity Statistical Bulletin. This regional table includes two productivity measures; GVA per filled job and GVA per hour worked. The subregional productivity data have been compiled to be consistent with the data in this regional table.
This requires ensuring that the subregional measures of GVA, jobs and hours are all consistent with the regional totals. The methodology is therefore concerned with how best to apportion the regional totals to the subregional areas. The approach taken is as follows:
From December 2013, regional GVA data are only published by ONS as unsmoothed data. Previously, both smoothed (headline) GVA or unsmoothed GVA had been produced. Regional (NUTS1) productivity calculations use the unsmoothed workplace based GVA series, to be consistent with the labour input series used, which are both unsmoothed and workplace based. The aim in the subregional productivity calculations is to apportion out, to NUTS2 and NUTS3 subregions, the NUTS1 GVA series used in the regional productivity estimates, that is, the unsmoothed workplace based GVA at current basic prices series (Table 1.1 in the regional GVA document included in the useful links).
At the regional level, GVA per filled job is calculated using a ‘Productivity Jobs’ series as the denominator. This is compiled from four components; employee jobs, self employed jobs, government supported trainees (GST) and members of Her Majesty’s Forces. For consistency purposes, the regional ‘Productivity Jobs’ series is benchmarked to the national ‘Productivity Jobs’ series, on a quarterly basis. To produce annual totals for regional Productivity Jobs, an average of the four quarters in the year is taken.
For subregional geographies, the ‘Total Jobs’ data series is used to apportion regional productivity jobs to NUTS2 and NUTS3 subregions. This Total Jobs measure is a workplace based measure of jobs that ONS produces mainly for use in calculating job densities at regional and subregional level. Total jobs data comprise employees (from the Business Register Employment Survey), self-employment jobs (from the Annual Population Survey), government-supported trainees (from Department for Education and Department for Work and Pensions) and HM Forces (from Ministry of Defence).
The total jobs series is used to calculate the proportions of regional jobs within each subregion for each year. These results are then used to apportion the regional ‘productivity jobs’ data series to the subregional level.
At the national and regional level, GVA per hour worked data are calculated using a ‘Productivity Hours’ series as the denominator. These data are calculated quarterly, based mostly on the LFS, and an annual total is constructed as the average of the four quarters in the calendar year.
At subregional level, only annual productivity data are being produced. Therefore, the Annual Population Survey (APS) is used rather than the Labour Force Survey as it has a larger sample size1. The process involves calculating total hours for each subregion as the sum of employee hours, self employment hours, hours worked in government training schemes and hours worked by HM Forces.
Employee hours are calculated by using the APS to estimate, for each subregion, the average hours worked per employee job by industry. These industry average hours are then multiplied by the number of employee jobs for each industry in each subregion. For the period from 2008 onwards, the number of employee jobs by industry is derived from the Business Register and Employment Survey (BRES). Prior to that, employee jobs by industry were derived from the Annual Business Inquiry (ABI)2. Self employment hours are calculated from the APS. For government training schemes and HM Forces, the regional totals are allocated to subregions based on each subregion’s share of regional employee plus self employment hours, as calculated in the previous stage.
Adding together the sum of employee hours, self employment hours, hours worked in government training schemes and hours worked by HM Forces provides a total hours estimate for each subregion. Once calculated these NUTS2 and NUTS3 subregional data are then constrained regionally to the NUTS1 ‘Productivity Hours’ data to ensure consistency with regional productivity data.
Unsmoothed time series data at small geographies such as NUTS2 and NUTS3 tend to show volatility, created by sampling and non-sampling errors. Therefore, a five year weighted average has been used to remove this volatility and produce a smoothed time-series. The results presented in this article are based on the smoothed subregional productivity data series. It should be noted that when calculating the subregional productivity data, unsmoothed data has been used at all times. The smoothing process has only been applied to the final results. For any users who would like to make use of the unsmoothed results, this data are included in the data section of this publication.
Figure 8 shows an example of the smoothing process showing both smoothed and unsmoothed time series data for Cheshire East. It shows how both the existence of some volatility in the unsmoothed data and how the smoothed data can help capture the important patterns in the data. The smoothed time series data reveals an upward trend in GVA per hour worked between 2004 and 2008 and a flat trend from 2008 onwards.
Data in this release are based on regional GVA data, productivity jobs and productivity hours data. Both are subject to revisions. These revisions feed into the published subregional productivity data, therefore data has been revised in this publication in comparison to the article published in April 2013. In particular, as mentioned in the introduction, there were some methodological changes made to the calculation of regional GVA in the most recent (December 2013) release which led to revisions in NUTS2 and NUTS3 workplace GVA3.
For 2005, it was not possible to use APS data, therefore LFS data was used – with the average taken of the four LFS surveys carried out in 2005.
BRES data is used for 2008 onwards based on the 2007 UK Standard Industrial Classification (SIC 2007). For data up to 2007, the ABI is used and this is based on the 1992 UK Standard Industrial Classification (SIC 1992).
More details of these revisions are available in the latest Regional GVA release.
Subregional productivity data are produced in this article for the NUTS2 and NUTS3 geographies. Nomenclature of Units for Territorial Statistics (NUTS) is a geography developed by the European Union to allow comparison of regional and subregional data across the EU-25 member states. A number of ONS regional and subregional outputs are produced based on the NUTS geography. These include regional and subregional GVA. These GVA data are an input in the calculation of subregional productivity. Each NUTS3 subregion covers the same area as either a single local authority or a combination of two or more adjacent local authorities. The data accompanying this article are based on the NUTS geographical classification that came into use on 1 January 2012.
The latest GVA per hour worked data available are for 2012 and the latest GVA per job data available is for 2011. The timeliness of the data is determined by the release calendar of the subregional GVA data, the total jobs data and the Annual Population Survey from which the hours worked are extracted. An update of the GVA per job filled data to include 2012 will be added to this release in the summer. Subregional GVA data for 2013 will be available in December 2014 and an update to this article will follow shortly afterwards.
Regional Productivity data are published in Table 9 of the Labour Productivity Statistical Bulletin.
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: firstname.lastname@example.org