The amount Britons produce for every hour worked has remained stubbornly stagnantby Matthew Whittaker / November 17, 2017 / Leave a comment
Matthew Whittaker makes the link here between productivity, living standards and the Budget next week. For a longer-term view on the productivity challenge facing Brexit Britain, read Diane Coyle’s essay from our December issue.
As a nation, we’re working smarter than we used to. A decade ago, for every hour we worked, we produced about £31.30 of stuff; today each hour of graft generates £31.85 of output. That sounds like good news. If we’re becoming more productive we should be able to treat ourselves to a pay rise, or perhaps some more time off. But the problem is, growth in our output per hour of 1.7 per cent over the last ten years compares with an average of 2.3 per cent every year in earlier times. Average annual growth over the last ten years is the worst we’ve recorded since 1812—the year Napoleon invaded Russia. We’re working smarter, but nowhere near as smart as we’re supposed to be.
Our response has been to work harder instead. Millions more of us are in employment today than anyone could have expected just a few years ago. And the decades-long downward march in the average number of hours we work has gone into reverse too. Between us we worked more than 53 billion hours last year; back in 2007 the total was 49 billion. But the productivity disaster dominates. If our output per hour had continued to rise at its long-run trend rate after 2007, our economy would be £430 billion bigger today than it actually is. More likely, we’d be a little bit less well-off than that figure suggests, but working a lot less too.