Anthony Hilton: Productivity crisis? The stats don’t tell the whole story
Saturday 29 March 2014
Economists have been banging on for months about the collapse in Britain’s output per worker, with productivity now 4 to 5 per cent below the peak scaled before the onset of the financial crisis despite increased business activity and relatively high employment.
This worries people like the Governor of the Bank of England and the Chancellor because it feeds into measurements of the amount of spare capacity in the economy, which in turn helps in predicting how much scope there is for expansion before inflationary problems flare up again.
The estimates of what is called the output gap are all crazy guesswork, of course, but it does not seem to deter our leaders from trying to set policy by them.
At last, however, Charles Dumas of Lombard Street Research has come up with what, to me at least, is the most convincing explanation: it is a statistical quirk.
Everyone knows that services form the bulk of the economy and the measure of productivity in services is value added per employee – the largest part of which is their wages and salaries. Over the past few years, however, a lot of people have accepted pay cuts rather than risk losing their jobs. So that means the measure of productivity anywhere this has happened is likely to show a fall – even if the people are working harder than ever.
Board creates magnetic field to achieve lift
Follow the latest events from this Champions League fixture
Company reveals $542m investment in start-up building 'a rocket ship for the mind"
Singer says the track was 'force-fed down people's throats'
techThe original free dating app will remain the same, developers say
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
Lord Freud hangs on as MPs of all parties 'call for his head' over disability comments
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...