Current national productivity levels

Existing national measures of GDP and productivity suggest the national wealth pie is not growing as before, and apparent productivity gaps between the UK and other developed G7 nations, which have persisted for decades, continue to do so

The ONS (Office for National Statistics) admits to making errors and assumptions when collecting and publishing this data on a quarterly basis – so it’s the best data available at this level – nobody else can collect it

In fact, the data is a lot more flawed than the ONS admit – see later – and could be described as ‘dangerously misleading’

Nevertheless, despite the widespread recognition that the data is flawed, leading economists treat them as facts  to set the scene and then explain the reasons for productivity trends, gaps and the so-called puzzle  i.e. the lack of productivity growth over the last 10 years or so despite increases in the labour force

All one hears, from the Chancellor of the Exchequer downward, is that the UK worker is working less efficiently than in years gone by – and the French and Germans work significantly more efficiently than we do

However, dig a little deeper and one finds:

  • National GDP – this leaves much of the economy either uncounted/ ignored, deemed uncountable or involves big errors – yet  apparent 0.1% falls or increases are met with misery or ecstatic headlines
  • National productivity is determined by measuring labour productivity alone – using GDP/ worker or GDP/ worker hours input – thus ignoring ever-increasing  capital inputs

But what else can decision-makers at national level use?

If measures of GDP and productivity at the macro national level are useless, then ignore them

Instead, they should resort to building a good-enough picture by assembling several credible pieces of the national economic picture, much like bits of a jig-saw puzzle, and once they have enough, the big picture will emerge

 

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