Why is UK output per hour so low?

CLAPTON

cells wrote: »

Like the BOE link suggests its probably certain sectors of the economy dragging the productivity of the rest of the economy down with em


Take an example of the north sea, an offshore oil platform that pumps 100,000 barrel a day equivalent probably needs just as many men manning it as does the same rig a few years later pumping 10,000 barrels a day. Thats a 90% falloff in productivity

That sector as a whole has seen a nearly -1 mbpd of oil output and and -4tcf/d of fall since 2007. A staggering ~ $50B / year drop off in productivity for UK PLC

indeed so, such variation happen all the time
however, does this fall in productivity compare with the impact of approximately 3-4 million immigrants since 2008?

michaels

Suppose 1 investment banker swans off to retirement with his/her 100mil bonus in 2008 and is not replaced due to the banking crisis meaning the job disappears and doesn't come back but over the next 7 years 1000 new barristas are employed on 10k then total GDP has not changed but GDP per head (a proxy for productivity) has been hit hard.

The consensus opinion still seems to be we want to see the back of all those high paying finance jobs because although they bring in lots of income for UK PLC they are too risky in terms of the population underwriting the catastophic failure risk. Given this we need to accept that productivity per head is going to be lower (not to mention income tax take down from 45mil to zero). I think the hounding out of Bob Diamond from Barclays was probably the turning point - turns out that Barclays on his watch was less evil than many other banks but he was the poster boy of all that was 'wrong' with 'casino banking'.

We could be like France and make employming people very expensive thus encouraging more capital investment per worker and higher productivity at the expense of having an extra 5% of unemployment but is this really where we want to be - this seems to be the big political divide in this country.

cells

CLAPTON wrote: »

indeed so, such variation happen all the time
however, does this fall in productivity compare with the impact of approximately 3-4 million immigrants since 2008?

the link shows which sectors have most contributed to the decline in productivity and it doesn't seem to suggest its a result of low productive immigrants are to blame and it makes sense

some of the big points in the link are


a decline in oil/gas/minerals output while also a RISE in employment of those sectors resulting in a big crash in the productivity of that sector. immigrants cant be blamed for that

a decline in the productivity of education. it is suggested this is because of a trend in employing more teaching assistants who are paid a lot less than teachers. doubt this has anything to do with immigrants either as its probably a decision made by british ministers or British head teachers

cells

CLAPTON wrote: »

indeed so, such variation happen all the time
however, does this fall in productivity compare with the impact of approximately 3-4 million immigrants since 2008?

looking at the report again, and the numbers on it, it shows such things as

professional/scientific/ and technical activities.....employment up in that sector quite a lot but productivity down quite a lot. Its not a sector that you would associate immigrants with

mining and quarrying.....employment up quite a lot, but productivity down quite a lot. again not really a sector you would associate with immigrants

financial and insurance .... employment down a bit, productivity down even more. again not what you think of with low skilled recent immigrants

education.... employment up a lot, productivity down a lot. puts the blame on teaching assistants. not sure again if immigrants take many of those jobs but they certainly don't CREATE them.



whereas the one sector most people think of with new immigrants has actually got more productive. retail and wholesale employs now slightly fewer people but is more productive.

CLAPTON

cells wrote: »

looking at the report again, and the numbers on it, it shows such things as

professional/scientific/ and technical activities.....employment up in that sector quite a lot but productivity down quite a lot. Its not a sector that you would associate immigrants with

mining and quarrying.....employment up quite a lot, but productivity down quite a lot. again not really a sector you would associate with immigrants

financial and insurance .... employment down a bit, productivity down even more. again not what you think of with low skilled recent immigrants

education.... employment up a lot, productivity down a lot. puts the blame on teaching assistants. not sure again if immigrants take many of those jobs but they certainly don't CREATE them.



whereas the one sector most people think of with new immigrants has actually got more productive. retail and wholesale employs now slightly fewer people but is more productive.

is your conclusion that if there were 3-4 million fewer people in the country, then productivity would be down even more?

cells

michaels wrote: »

Suppose 1 investment banker swans off to retirement with his/her 100mil bonus in 2008 and is not replaced due to the banking crisis meaning the job disappears and doesn't come back but over the next 7 years 1000 new barristas are employed on 10k then total GDP has not changed but GDP per head (a proxy for productivity) has been hit hard.

The consensus opinion still seems to be we want to see the back of all those high paying finance jobs because although they bring in lots of income for UK PLC they are too risky in terms of the population underwriting the catastophic failure risk. Given this we need to accept that productivity per head is going to be lower (not to mention income tax take down from 45mil to zero). I think the hounding out of Bob Diamond from Barclays was probably the turning point - turns out that Barclays on his watch was less evil than many other banks but he was the poster boy of all that was 'wrong' with 'casino banking'.

We could be like France and make employming people very expensive thus encouraging more capital investment per worker and higher productivity at the expense of having an extra 5% of unemployment but is this really where we want to be - this seems to be the big political divide in this country.

the counter to that argument is that the employer of that wiz kid getting paid £100m might replace him with a robot or another wiz kid who will work for £100k or a turnip and that his £100m wage didn't disappear but is now in the pocket of consumers (lower prices) or shareholders (higher profit for the company)

I cant think of many people who truly add new value and create new things and a lot of them are paid penuts, most people just meet demand, demand that is there if they are alive or not

cells

CLAPTON wrote: »

is your conclusion that if there were 3-4 million fewer people in the country, then productivity would be down even more?

almost certainly that is the case, especially if this 3-4 million are mostly working age


The following sectors would certainly become less productive in that example

retail and wholesale
public admin and defence
real estate less imputed rents
water supply / sewerage / waste management
manufacturing
accommodation and food services
electricity gas and steam
admin and support

all for pretty much the same reason, those sectors/businesses would see lower demand (less people needing those things) which will be somewhat offset by lower employment in those sectors BUT generally many businesses dont scale so well.

so while an asda superstore might be able to cut 10% of its workforce if its sales drop 10% the local corner shop, or take away, or cinema probably cant. less sales same staff (or less but not as less as sales) equals a fall in productivity

CLAPTON

cells wrote: »

almost certainly that is the case, especially if this 3-4 million are mostly working age

there seems no evidence for that nor any theoretical reason either

is it a universal law, do you think, that the larger the population the higher the productivity?

plenty of countries we could try the out logic to see if it is so

cells

CLAPTON wrote: »

there seems no evidence for that nor any theoretical reason either

is it a universal law, do you think, that the larger the population the higher the productivity?

plenty of countries we could try the out logic to see if it is so

well i know many a businessmen from a wide range of industry and the main thing most of them will tell you that will impact their business and its productivity and its profitability is demand

more demand equals more productivity equals more profit


and although there may be many countries you can look at, the variables are too high to draw a conclusion by doing that (you will probably find that the highest productivity nations are the ones with high rents from national resource contribution, eg places like qatar or norway)

better to look within countries but even then there are some difficulties as sometimes industries concentrate in certain areas

How productive is say London vs Birmingham
Or England vs Wales
Or the NE vs the SE


also of course population density matters here too not just population



oh...also it is generally considered that as nations urbanise they get richer AKA as they live more densely. if you disappear 4 million people our density drops or we kind of go back a little in the urbanisation table. especially if these 4 million are immigrants who probably more than typical live in urban areas rather than rural ones

cells

CLAPTON wrote: »

there seems no evidence for that nor any theoretical reason either

don't be stupid there are clear reasons why a bigger population sharing fixed costs makes a nation more productive. its pretty much in the title .... sharing fixed costs

it also applies to the whole world. more people = more productive = more possibilities

imagine if the worlds population had stopped growing at 10m people. would we be more or less productive?

or imagine a disaster happens. and the worlds population falls to 10m people. what then? we would all be fooked....and productivity would drop considerably


to do big projects needs big numbers of people.
you can not do a $50B research project or send people to the moon or spend two decades and billions discovering new drugs if you only had a handful of people