Why is UK output per hour so low?

CLAPTON

antrobus wrote: »

I'm not sure I'd buy that as an explanation.

After all the good old USA has an awful lot of illegal immigrants, some say as much as 5% of the US workforce are illegals, working for less than minimum wage, picking lettuces, and, err, washing cars.

Given that USA's GDP output per hour looks about 25% higher than the UK according to the opening post, I'm not that convinced that having a lot of cheap illegals, or indeed cheap car washing operations, is an explanation for the UK's poor performance.

price has nothing to do with supply and demand then?

antrobus

CLAPTON wrote: »

look, I know that if you go shopping and see the same identical product in two shop at different prices you ALWAYS buy the dearer;
If there is only one shop then you always demand to pay at least 10% more than the asking price:
I know you NEVER shop around for cheaper deals on gas or electricity
and I know that if you were offered two very similar jobs you would always go for the one with the lowest salary.
I know you never get a cash back CC or go for the best saving rates

..

I do know that the OP bought some footwear from Sports Direct despite their reputation as an evil zero-hours employer who also stiffed the taxpayer over USC.

But then it is very difficult to keep track of all these things.

antrobus

CLAPTON wrote: »

price has nothing to do with supply and demand then?

The topic is whole of economy productivity.

I am simply pointing out that having a lot of cheap illegals doesn't seem to have stopped the USA from having 25% more output per hour across the whole economy than the UK. Therefore it would not appear to be an adequate explanation for the UK's 'poor' productivity. It might be an explanation for many things, but I don't believe that productivity is one of them.

CLAPTON

antrobus wrote: »

The topic is whole of economy productivity.

I am simply pointing out that having a lot of cheap illegals doesn't seem to have stopped the USA from having 25% more output per hour across the whole economy than the UK. Therefore it would not appear to be an adequate explanation for the UK's 'poor' productivity. It might be an explanation for many things, but I don't believe that productivity is one of them.

clearly the sole and only impact on productivity isn't immigration.
Things like benefits system, cultural issues, technology and the willingness to trade larger numbers of part timers for fewer full time workers will impact output per worker statistics.

Also of course the size of the black economy will have an impact.

So I'm not sure of the relevance of comparing USA with the UK without taking other things into account.
The significant issue in the UK is the fall in productivity over the last few years.
It would seem the large number of eager young immigrants haven't, on the whole, found employment in high tech industry but rather have found work in coffee shops.

antrobus

CLAPTON wrote: »

clearly the sole and only impact on productivity isn't immigration.
Things like benefits system, cultural issues, technology and the willingness to trade larger numbers of part timers for fewer full time workers will impact output per worker statistics.

Also of course the size of the black economy will have an impact.

So I'm not sure of the relevance of comparing USA with the UK without taking other things into account.
The significant issue in the UK is the fall in productivity over the last few years.
It would seem the large number of eager young immigrants haven't, on the whole, found employment in high tech industry but rather have found work in coffee shops.

I believe that the explanations provided by Ian McCafferty have more merit.
http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech739.pdf

Loughton_Monkey

Calculation of GDP is an art and not a science. ONS do their best, but when you consider the complete business breakdown of the recession, followed by the re-building of the economy in a complicated way.....

Put that against annual immigration of 500,000+ per year, and emigration of 200,000+ per year, we have a massive turnaround in the behaviours, habits, and 'ways' of the population......

Is it any wonder that the figures are perhaps less accurate, and/or less reflective of the real world? Do we really think that the GDP of car washers is measured properly? What about the prostitutes and drug dealers? What is an 'hour worked' for these people? Do we count the 3 hours on the street waiting for a 'client'? Or just the 20 minutes (or 3 minutes in some cases) to 'fulfill' the transaction?

It would be better to have a rather more accurate asessment of, say, the FTSE 100 firms who can no doubt measure quite accurately whether their productivity is increasing. I expect it is. That's what we want to hear, anyway. Why worry about the growing number of car washers, fruit pickers, prostitutes, burger flippers, sandwich-makers, and restaurant washer-uppers? They are earning a small modest income. Far better than sitting at home being funded by the taxpayer.

If I find £100 down the back of my sofa, and want to "distribute" my new found wealth into the economy, then consider 2 possibilities. A. I can give it to George Osborne to pass it on to the neady (after deducting the costs of doing so), or B. I can use the money to go and have my car washed, my nails re-furbished, have a BLT from subway, before going to discuss economics with a nice Lithuanian lady in the local Sauna....

I would suggest that 'B' is more productive for the economy.

CLAPTON

antrobus wrote: »

I believe that the explanations provided by Ian McCafferty have more merit.
http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech739.pdf

could you give a short summary and explain why USA is different ?

C_Mababejive

post #1
Well it depends on what is measured and included in that output figure.

You can easily measure cars or widgets made on a production line but can you measure the output of say,a manager,supervisor or similar who sits in a chair all day tapping at his laptop/scribbling and drinking coffee?

CLAPTON

C_Mababejive wrote: »

post #1
Well it depends on what is measured and included in that output figure.

You can easily measure cars or widgets made on a production line but can you measure the output of say,a manager,supervisor or similar who sits in a chair all day tapping at his laptop/scribbling and drinking coffee?

for the economy as a whole, the measure is essentially GDP divided by the work force required to produce the GDP
widgets aren't measured

for specific industries then such things may be relevant depending upon the question

cells

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