Does the UK really have a productivity problem?

Money money money. Image: Getty.

Productivity – or the UK’s lack of it – is the cause of the country’s economic woes. We have been told this by countless politicians and commentators. And the focus on Britain’s “productivity puzzle” is back in the headlines thanks to the latest budget. The UK’s latest productivity and growth forecasts have been slashed, such that the leading IFS think tank now predicts two decades of no earnings growth.

A similar story tends to be recycled every time growth forecasts change or data comparing the G7 countries or regions within the UK is released. Phrases like: “It takes a German worker four days to produce what a British one does in five.”

But how is productivity the cause of the UK’s problems and what does this statement actually mean? Unfortunately very little, because the term is used inconsistently. There are different measures of productivity and the nature of the UK’s problem depends on which one we are looking at and how it is being used.

Different definitions

At its base, productivity is a measure of output over input. The most commonly used measure of output is value-added. Literally the value added to goods and services produced in the UK, calculated as the monetary difference between what is sold and the intermediate goods used in its production.

The most commonly reported input is the number of workers or worker-hours. When combined this gives us a measure of labour productivity, calculated for each industry and aggregated for a region or the whole economy.

So far, so good. However, there are some more crucial distinctions, depending upon how labour productivity is used.

If we compare the performance of the UK with other countries or that of London with other parts of the UK, this requires making the comparison at the same point in time. In this case national statistical offices use current price measures of value-added. They use prices in each country at the point of comparison, converted into a common currency (usually US dollars) and adjusted for what these can buy in each place. This is called purchasing power parity or PPP.

Hence, what we are saying when we say that London is more productive than Carlisle in the north of England or that the UK is less productive than Germany, is that the value-added at current prices produced per hour worked in those places (what economists would call nominal productivity) is different. This is likely to depend largely upon the activities that are being performed in each place.

If some highly lucrative activities are concentrated in one part of the country – say financial and professional services in London – or within a country – think of complex manufacturing across Germany – then this will strongly influence the current price productivity data. The fact that the UK lags behind other countries on this measure reflects what goods and services it produces and the prices it can command for them versus what it has to pay for intermediate inputs.

So some of what the UK produces may be attributable to the skills of workers – but clearly the UK has wider historical issues regarding the types of industry it has and the geographical diversity of its economy. It is misleading to label this a productivity problem.


Skills and efficiency

A second way that labour productivity is used is to chart its change or growth over time. This calculation involves fixing prices at some point in time and calculating the change in the quantity of output produced to give a real measure of value-added. Hence if real labour productivity is increasing at 3 per cent per year, a country is producing 3 per cent more actual goods and services per hour worked than it was before, independent of price changes.

It is this calculation that is reflected in the growth of the economy and increases living standards. It is often interpreted as a measure of the increasing efficiency of workers but we must bear in mind that how work is organised, what equipment workers have, how skilled and well-trained they are and how close to capacity the economy is operating will all affect this measure. Also, certain industries have greater propensity for automation, which is central to increasing productivity.

Unfortunately, since the financial crisis productivity growth across the G7 has been much lower than it was prior to it – which has raised questions regarding how realistic prior measurement was, particularly in financial services, and whether the world has entered an era of slower technological progress. The UK’s productivity fall was steeper and its rebound weaker than in comparison countries.

The ConversationThis might be due to a number of reasons: low capital investment, poor skills, the high employment rate and low interest rates keeping inefficient companies afloat. No single explanation is currently winning the day. I would, however, urge readers to think about which measure of productivity is being used and what it means the next time we are told that the UK’s economic woes are due to poor productivity.

Paul Lewis, Senior Lecturer in Political Economy, Birmingham Business School, University of Birmingham.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Wild boar are moving back to Genoa, and not everyone is pleased

A wild boar, c1933. Image: Getty.

Crossing the Ponte Gerolamo Serra in the Italian city of Genoa, I spotted a small crowd clustered by the river wall. I approached, intrigued, and peered over the wall to discover the subject of their delight: a sounder of eight wild boars – the adults sheltering from the heat in the undergrowth, while the juveniles foraged among the foliage that grows in the river bed during the dry summer months.

In any other city, such a sight might have been surprising. But in Italy, and particularly in the region of Liguria, where Genoa is located, the population of wild boars has been increasing at such a rapid rate that these incidents are now common. Across the country, it’s estimated that the population has risen from 600,000 to 1m over the past decade.

But while wild boars may look comically out of place trotting about the city, it’s actually a natural result of the way people have migrated – and the wars they have fought – over the course of recent history.

Making a comeback

A species native to Europe, the wild boar (or “cinghiale”, in Italian) largely disappeared from its historical territories during the 18th and 19th centuries. Their decline was widely attributed to the combined effects of habitat change, competition for space and resources and, of course, hunting.

Wild boars were a prized quarry, revered for their ferocity – and the danger involved in pursuing them. According to local folklore from the region of Liguria, the last truly wild boar was hunted and killed in 1814, in the province of Savona.

After an absence of more than a century, wild boar began to return to Liguria, and to the neighbouring region of Piedmont. A further influx occurred during World War I, when it’s believed that military activities in the south-east of France forced parts of the population back into Italy over the Alps.

Although hunting fraternities were quick to augment this fledgling population with wild boars transported from elsewhere, the return of the species was primarily due to natural causes. From the 1950s onwards, traditional agricultural practices were abandoned as more and more people moved from rural towns into the cities. This meant that large areas of formerly cultivated terraces and pastures were rapidly overgrown, fast becoming dense secondary woodlands.

A city gone wild

This spontaneous “rewilding” has become a controversial issue in the region. Many conservationists and environmental organisations consider the region’s return to a “wild state” a success. But others believe that the encroaching wilderness signals a loss of traditional woodland knowledge and a reduction of biodiversity, associated with the pastures and meadows.


The province of Genoa is among the areas most densely populated by wild boar in Italy, with an estimated 25 boar per 10km². Rewilding processes have brought woodlands to the city limits, blurring the boundary between rural and urban areas. The species has expanded beyond the hinterlands, colonising highly urbanised, densely populated city spaces in Genoa, drawn by the abundance of food waste created by humans.

In 2009, the infamous boar Pierino made his home at Righi, on the outskirts of Genoa, where he was routinely fed with focaccia by enthusiasts. Today, a family of wild boar call the Albergo dei Poveri – a historical hostel for the Genoese poor in the city centre – their home.

But while their antics are often recorded and shared with glee on social media, the threats posed by the presence of wild animals has become a preoccupation for the city’s municipal administration.

Boorish behaviour

Wild boar have been involved in a number of traffic accidents, and have proven to be particularly dangerous when with their young, attacking dogs and even people. The city council in Genoa has put forward many proposals to reduce the number of animals in the city, ranging from forced removals, to sterilisation, increased attention to waste disposal and approved hunts. About 90 wild boar were reportedly culled in 2018.

Needless to say, each of these measures has been hotly debated. Animal advocacy groups staunchly oppose the proposals, and sometimes obstruct the authorities’ attempts to take action, often sending patrols to care for the animals, and even give them names. But other residents are displeased with the animals’ presence in the city, and have consulted with the council on how to address the problems that they cause.

And so Genoa continues to grapple with thorny issues surrounding the presence of wild boar in the city, with the city authorities seeking to resolve a polemical issue that embroils the lives of animals and humans alike. So far, a collective, coherent and communally agreeable strategy has proven evasive; one that considers the need for public safety, hygiene and health with the ethical responsibilities towards to wild boar themselves.

Meanwhile, the animals themselves continue to lounge and forage beneath the Ponte Gerolamo Serra and elsewhere, bringing a little of the wilderness into the city.

The Conversation

Robert Hearn, Assistant Professor in Human Geography, University of Nottingham.

This article is republished from The Conversation under a Creative Commons license. Read the original article.