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National productivity measures

 

  • There are three measures of national productivity on offer (from the UK’s ONS):

 

     

                                          National productivity measures

 

  • Output per hour worked the most popular measure:
    • Reflects the international differences in hours worked, holiday entitlements and the flexibility of the labour market including part-time and other alternative work patterns
    • More relevant to time than results-based work

 

  • Output per worker – the main alternative measure:
    • Simplest to calculate because internationally consistent definitions of output and employment figures are readily available
    • More relevant to results-based work
    • If people work longer hours, productivity can appear to increase

 

  • Output per person of working age – an also-ran measure:
    • Shows how well a nation uses all its workers, actual and potential, in productive employment
    • But many potential workers may be unemployed or under-employed

 

 

  • The above are all partial productivity measures – they only cover the labour resource – capital and material productivity levels are not measured

 

  • Price, quality and service levels could be said to be covered by GDP for the private sector as their sales depend on all three

 

  • The same cannot be said for the public sector – the amount of money the government spends on the public sector depends more on political priorities than assessments of cost, quality and service levels offered – hence parliamentarians talk passionately about inputs, not outputs

 

Outputs – GDP

  The output of any nation is the many different products and services from its many different sectors   The only way to measure them all is to convert them into a single measure of total economic activity – Gross Domestic Product   GDP is variously defined as: The value of all final goods and …

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Inputs – Labour – Hours

The UK labour force works comparatively long hours on average compared to most other nations   Some argue that people in the UK should work even more hours per year on average – others call this a retrograde step, saying the longer term aim should be to reduce working hours per person   However, trends …

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Inputs – Labour – Skills

  The future depends on how well nations develop the knowledge and skills of their people: China and India already produce over 5 million graduates every year Shanghai topped a recent OECD test for reading, maths and science for 15-year-olds, America was 17th, Britain a lowly 25th   The key is to get the right …

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Inputs – Materials

The UK once had the good fortune to be rich in natural resources – plentiful supplies of coal, iron ore, wool and grain, at least until better alternatives were found abroad   We also had an empire from which to import other basic resources like cotton and rubber   More recently, North Sea oil and …

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Inputs – Capital

The UK currently invests a smaller percentage of its GDP than any of its main competitors except the USA yet investment is said to be ‘the lifeblood of economic growth’ The more you invest, the more national productivity should rise, unit costs fall, competitiveness rise, sales rise and wealth, jobs and tax-take increase   But …

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NHI – National Happiness Index

They say ‘if people are happy they spend more’ which enlarges national GDP cakes – they also work better, take more and bigger risks, become more creative Thus Jeremy Bentham, the 18th century UK economist said: “Government action should make the most people happiest” Bhutan don’t even bother to measure their GDP, preferring to use …

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NKI – National Knowledge Index

A good NKI would show whether a nation had a competitive edge with its knowledge resources and whether further investment was needed in education, R&D or intellectual property legislation, say   However, as with NHIs, there are few useful NKIs available   An example is the one used by India           …

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