Productivity is an economic measure defined as the ratio of GDP to hours worked in a given period. While this sounds a sensible measure, it is, of course, fraught with uncertainty. We know that all the economic data is constantly being revised and it must, in truth, be very difficult to have any certainty on the precise amount of GDP much less the number of hours worked by the population in a period. For this reason, it seems dangerous to rely on productivity calculations year on year, but it must be much more difficult to compare productivity between one country and another when there will be inevitable differences in methodology. However, productivity is a measure frequently used by politicians to compare the UK unfavourably with its major trading rivals and, therefore, however unscientific the measure is, it is one that is taken seriously by government and economists.
We have written before about the possible consequence of Brexit on the labour force and, in particular, the availability of low skilled and low paid labour in agriculture and similar industries. It seems likely that, even if we end up with a “soft” Brexit and there is still some level of free movement of labour, the UK will become a less desirable destination for Eastern European workers simply because the fall in the pound will mean that they will be able to send less value back to their families in their home country.
There seems to be two ways of dealing with this issue. The first is that UK business will have to invest far more in automation to reduce dependence on low skilled workers. This seems realistic with ever improving technology using GPS to provide self-driving Uber taxis, drones delivering packages and farm machinery moving itself across the fields unaccompanied by drivers. Only those companies that invest in the right technology will be able to make the productivity gains that are needed to stay competitive. The second method is perhaps more fanciful. Undoubtedly the Prime Minister and the Chancellor, for example, both work very long hours, but it seems unlikely that the results of their efforts are measured in GDP terms. Accordingly, if they were to work less hours or, indeed, the nation were to dispense with their services altogether, there should be a discernible improvement in our productivity. Without wishing to make a party political point, hyperactivity on behalf of politicians has led to many of the nation’s woes over the last few years so if they did less we would perhaps benefit more.
