Britain’s Productivity Decline Is the Worst in 250 Years
bloomberg.com
bloomberg.com
Our government over the last 10 years has been racing to the bottom, and now we're leaving the EU, I'd love to see some of the Tories dreams of poorer employment rights come true. Some of which are horrifying, JRM to name one.
What ? Can you share the research supporting that ?
Also I can't wait to see the Pro-Brexit teams out picking fruits and washing toilets & floors.
Now with the UK's departure, employers may struggle to fill vacancies (and indeed it appears they have been - see link below), so the poster was sarcastically suggesting that they can't wait to see pro-leavers performing these tasks because it seems like in many cases UK nationals aren't willing to perform these types of roles.
The nature of the role is irrelevant and the poster wasn't suggesting that pro-leavers should be subject to degradation!
https://www.theguardian.com/business/2019/oct/11/tonnes-of-c...
I'm not from nor living in the UK but I sure hope things work out.
My post was a dig at the idea that all the UK needs to allow into the country is highly skilled people. I don't buy that argument.. But lets see.
If the cost of goods increases, it won’t likely be severe since it serves the entire population while only a small percentage of the population produce the goods. Also changing prices affects demand independently from cost of production.
It also lowered aggregate demand, and this lack of domestic demand partly explains why Germany has so many problems recovering from the crisis.
Depends how you look at it - they certainly had an impressive account surplus, for 4 consecutive years (currently world leading $293b).
> 1 good job became 2 bad jobs, which meant less contributions into welfare and pension funds
This means lower contributions but also much lower payout for welfare.
> this lack of domestic demand partly explains why Germany has so many problems recovering from the crisis.
AFAICT domestic demand in Germany is still strong, but clearly attempting to boost it through welfare proved to be an inferior strategy.
They're essentially the old method of factory workers showing up outside and the manager just picking X number for the day. I would have thought Britain has moved passed that.
Having said that I'd rather we had low productivity than the problems some of the Southern European countries have had with high youth unemployment.
It was usually not worse than the EU's, often better with the years 2017/2018 as notable exception: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locat...
https://tradingeconomics.com/united-kingdom/gdp-growth
Set the graph to 25 years and take a look. Quarterly GDP is a pretty stable value - to the extent there's any sort of lower average since the recession (which is a bit hard to eyeball) which such a small difference level it can easily be a measurement artifact. GDP calculations get changed from time to time and the changes aren't marked on the graph.
As for low productivity growth in the UK, one of the reasons economics has a bad reputation is because of "mysteries" like this.
https://tradingeconomics.com/united-kingdom/productivity
Look at the 25 year graph. Growth flattens off around 2004. Gee, what happened in 2004?
https://en.wikipedia.org/wiki/2004_enlargement_of_the_Europe...
Since 2004 the UK has had waves of unlimited immigration from ex-Soviet states that are extremely poor by comparison. It's been one of the most popular destinations for immigrants due to being English speaking, good at creating jobs and so on.
What do we expect in an environment where cheap labour is abundant? We expect, firstly, stagnant wages after adjusting for inflation:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...
(look at the graph of real vs nominal in figure 1)
And we expect low productivity growth because you get that through automation, but why automate anything when wages can't rise because there's an endless queue of people waiting to take jobs.
There's no sign of this changing on the horizon. Johnson talks about changing the immigration system, but he is naturally very pro-immigration and always has been. With nobody to challenge him on the horizon and a bureaucracy so intellectually dominated by unlimited immigration thinking it actually can't say what the UK population even is, I would be willing to bet on a continuation of the UK's long term productivity stagnation.
From a purely productivity-oriented perspective though, the good news is that the productivity stagnation isn't "real" in the sense of "we don't know how to raise productivity", it's just delayed by the lack of any need to. In contrast US productivity growth has continued in a fairly stable way. There are plenty of ways to boost productivity lying around. If wage growth continues to accelerate for whatever reason, productivity growth will follow some years later.
Go to that chart, select 25 years then click on the graph button and select trend. It doesn't look healthy.
The differences we're talking about here are very small. GDP calculation is meanwhile way less precise than economists like to pretend.
For instance GDP per capita for the UK is frequently quoted as if it's a meaningful statistic. But ONS population statistics are labelled as "experimental". In other words the government doesn't know how many people are in the country, making GDP per capita (dividing GDP by population) a meaningless value.
Modern GDP is meant to include illegal activity, i.e. something governments try to wipe out when they find it. How are you meant to precisely add up the total value of all illegally exchanged goods and services? It can only ever be a wild guess.
UK GDP stats for Q1 are almost always wrong and get revised later in the year. This error is systematic yet it never gets corrected.
What I'm getting at here is that such a tiny trend in a field as unreliable as economics doesn't let us conclude very much.
Why did other EU countries not suffer the same around 2004?
Germany's looks like it skyrocketed. Same with Switzerland's.
France, Benelux and Spain show an increase in productivity.
Italy, which chose to not apply any restrictions in 2007 (RO/BG ascension) shows a massive increase post 2007.
Norway, which is not a popular destination, has a weird curve.
The United States has around the same percentage of immigrants per year as the UK - ~0.3% of the total population. Canada's is double that (and rising) at 0.65%. Explain their continued growth in spite of immigration? Or maybe it's due to it? Mexico's productivity is dropping, fwiw.
There's really only one sustainable path to increased productivity: technology. There are limits to how long people can or will work, so you have to get more out of them per hour. That means making them more efficient, which normally means better tools. It can also of course mean a society-wide reduction in wasteful non-work but that's harder to pull off.
The UK has seen massive levels of intra-EU immigration compared to other countries. It was one of only two countries that didn't impose transitional controls for years in 2004. The EU likes to talk about freedom of movement but actually almost every country except the UK chose to restrict it. If you look into it you'll see that for many years after 2004 most countries still restricted freedom of movement from the 2004 entry countries.
If you look at Germany then the end of their transitional controls is in 2011, in the middle of the huge productivity drop associated with the GFC. But after that recession ends and productivity returns to normal, productivity growth has completely ended. That aligns with the UK experience.
Most other countries were not hit with the same sort of sudden influx, due both to language issues (English is by far the most learned language) and due to their transitional controls.
Italy's data looks pretty odd to me. It's flat except for a large step change at the time of the GFC?
USA figures aren't comparable. USA only allows legal skilled immigration. For unskilled labor of the sort that can be automated, yielding productivity increases, it's mostly illegal immigration so won't show up in stats so easily.
The official ONS definition - which anyone can check on the ONS site - counts anyone who works one hour a week as employed.
The figures also include anyone who is self-employed for tax purposes, whether or not they have any income from work.
If we used 1970s metrics, where employment was defined as having a full-time job that comfortably covered basic living expenses, unemployment would be running at absolutely terrifying levels.
As I said elsewhere underemployment has been falling as well.
"The number of people in employment in the UK is measured by the Labour Force Survey (LFS) and consists of people aged 16 years and over who did one hour or more of paid work per week and those who had a job that they were temporarily away from (for example, because they were on holiday or off sick). The largest two categories within employment are employees and self-employed people; in recent years these two categories have accounted for over 99% of all people in employment."
The "self-employment" rate, which mainly consist of various low-paying gig jobs without the welfare benefits of a full-time job, is growing and growing: it was 12% in 2001 and 15% in 2017. And there's this poignantly beautiful graph about income distribution between full-time employees and self-employed people in Figure 3 in this ORS article: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor.... Ah, I like it when distribution graphs clearly tell more about economic situations than single-number statistics.
One should understand that the overall decreasing quality of jobs (and wealth inequality created by those crappier jobs) are really the main problem. Unemployment rates (in the definition that neoliberal governments use) are more of a propaganda at this point.
China has also created many low wage jobs and decreased unemployment. So how does their productivity compare to ours?
I don't know, the OECD doesn't have data apparently: https://data.oecd.org/lprdty/gdp-per-hour-worked.htm
My guess would be that it is catching up, but still much lower.
However, productivity per hour (in US dollars) is still much higher in the UK than e.g. Australia, the EU-28, the OECD or Canada. I'm not sure why this study took 2010 as a baseline though, it seems to be a bias towards how well countries copied with the financial crisis.
China doesn't need a high productivity because they have man power. Sometimes you get 10-20 or more "assistants" for a technician if you are there for a business trip.
True; China doesn’t need high individual output as it more than makes up with sheer number of individuals. But, IANAE and even I can see how absolute per-capita numbers are meaningless outside of analzying an individual nation’s recent performance. On a global stage, the only absolute comparison of significance is per-trading block.
So forget about comparing absolute numbers and look at relative trends, i.e. compare productivity growth. And this is why report is so concerning, because while China maintains its slow but steady growth in productivity (~6.6%), ours is flat at best (≤0%) and has been now for several years.
The UK’s relative lack of bodies means we must always keep our per-capita productivity at a much higher level than China’s just to keep up. To use the popular aphorism: “Work Smart, Not Hard.” And we are doing neither, which means we’re falling behind.
Yes, the reported flatlining is at least partly in consequence of the utter shambles of the Brexit process, but if post-Brexit UK can’t get productivity growth back up toot suite then it hardly takes an economist to project these trends forward and guess where it’s going to be 10 or 20 years from now.
The UK has cruised far too long on credit and the legacies of empire. Now that we’ll really have to work for our living, it’s going to come as a nasty shock.
If you don't believe in that then it's your duty to leave and let those that do continue forwards with an ever closer union.
The UK joined really hoping to push the EU more towards a confederation which it would've felt comfortable in, the whole "working from the inside" thing that people are always saying is the best way to influence the EU. But ultimately a majority of the rest of the EU wants much closer integration than the UK would've ever been comfortable with... so here we are.
The sovereignty axe swings both ways.
More independence gives you more degrees of freedom but less power. More unity gives you more power where you're aligned. To maximize effectiveness, in a purely selfish way, it makes sense to sacrifice degrees of freedom for more power if you're not particularly interested in those degrees of freedom to begin with.
The only ways Brexit makes sense are as sacrificing power absolutely (the North Korea Juche approach), or changing the degrees of freedom being exercised (giving up on the Western European social model).
Meanwhile, I’m in a Tory safe seat with one of the most rotten MPs in the house. Every single election, my vote against them doesn’t do squat, thanks to the fit-up that is FPTP. And what about the “vast unelected government” that is our own UK civil service, which will no doubt grow even larger as we re-onshore the bureaucracy. Well, at least until the hard-right Tories slash public spending to the core, turning the UK into their low-tax haven for the super-rich—i.e. the same unelected elite who engineered this whole scam in the first place.
Sucker.
Believe me, I was never a fan of provincialist Scotland and utterly despise the huge separatist chip on its shoulder and everything that stands for, so to see the English fall for the very same scam really jams in my craw.
Honestly, the sooner that Brits get to experience the same standard of living that Chinese factory workers now enjoy†, the sooner they’ll drink a big cup of STFU and realize just how unfairly blessed before now they really were.
No sympathies for them that got us into it; I only feel bad for t’kids.
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† And, having come from grinding rural poverty, is still a step up for them.