UK productivity lagged most major counterparts in 2014

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But UK manufacturing output per worker outperformed key European competitors.

The UK’s productivity lagged that of most other major developed economies in 2014, according to the final estimates of international comparisons of productivity out today. This was no surprise because it was roughly in line with the preliminary estimate and the trend of recent years. Yet for the first time ever, the final estimates compared the productivity of key UK sectors such as manufacturing with their counterparts in the US, Germany, France and Italy.

The report compared the productivity UK manufacturing against the other economies using two measures: output per hour worked and output per worker. The data for output per hour worked showed that the productivity performance of UK manufacturing lagged that of the US, Germany and France on average in the period from 2010 to 2014. However, UK manufacturing fared better under the output per workers data, which showed that the UK only lagged the US.

Productivitychart

The productivity of UK manufacturing lagging the US under both measures signals that US manufacturers benefit from the economies of scale that flow from having a large domestic market at their doorstep. Meanwhile, the differing productivity performance of UK manufacturing against its European counterparts under the two measures highlights that the average hours worked in manufacturing vary widely between countries.

The first-time estimates of productivity of key sectors in the UK and its major counterparts is a positive step toward trying to work out why the productivity performance of the UK economy has underperformed.

Yet research by EEF suggests that looking at aggregate measures of productivity such as output per hour or worker to explain the UK’s poor performance could be missing a trick. EEF recently talked to manufacturers about their perspective on the UK’s productivity problem and the resulting research report – Productivity: The State of the Manufacturing Nation – will be launched at EEF’s annual conference on Wednesday.

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