In the News
Focus on Productivity
23rd November 2017
Raising productivity was one of the key aspects of Philip Hammond's budget yesterday. The 'Productivity Puzzle' - namely why the UK's productivity has been lagging for so long - is a supply-side problem that has been much debated by economists as well as politicians, and it can be hard for an A level economist to get their heads around.
UK productivity growth is at its lowest for over a century. What's going on? https://t.co/KCBbE2uNY6 #IndustrialStrategy pic.twitter.com/rHyjrQW6Or
— Office for National Statistics (ONS) (@ONS) November 27, 2017
Two BBC resources based around the Budget might help.
The first is a brief video report recorded by Simon Jack at the Museum of Science and Industry in Manchester, which presents a visual interpretation of why growth in productivity is needed in order to fund rises in wages. The link here should take you to that item in the BBC's reporting stream for the Budget.
The second is a more in-depth article exploring the UK's 'decade of flat productivity.' It explains clearly the issue, and the reasons for the OBR's repeated over-optimism in predicting rises in productivity as we emerge from recession.
Students reading the article could use it to identify examples of:
- Factors determining Demand for Labour or Marginal Revenue Product of Labour
- The multiplier
- The accelerator
- Automatic Stabilisers in action
- Real Wage stagnation
- Tertiary sector of the economy
- and perhaps consider whether it is inevitable that an economy which earns most of its GDP from the tertiary sector will find it harder to raise productivity than one which earns more from the secondary, manufacturing sector.
Are smartphones damaging our attention spans? Could this be weighing down on productivity? https://t.co/ZUFDSWh9aI #BankUnderground pic.twitter.com/xMuOlgWjp0
— Bank of England (@bankofengland) November 28, 2017
"It's this #gap between what's happened and what we expected that measures the extent of #frustration in the UK #economy" - Our Director's take on the #productivity #puzzle https://t.co/SLBw3Ei4Bo#BudgetDay2017 pic.twitter.com/HXoZLFNtPL
— National Institute of Economic and Social Research (@NIESRorg) November 25, 2017
On average, German workers took around four hours to produce what UK workers did in five hours in 2016. Read the factcheck: https://t.co/DJ5zuqQRug pic.twitter.com/zLONIs6U1e
— Full Fact (@FullFact) November 28, 2017
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