Manufacturing productivity

The UK’s productivity in manufacturing has always been in the forefront of discussion because the sector is so open to global competitive forces. Table 1.11 gives a brief summary of trends in labour produc­tivity for the whole economy and for manufacturing, together with trends in manufacturing output in the UK between 1964 and 2009.

Table 1.11 United Kingdom productivity and manufacturing output (1990 = 100).

UK output per person employed

Source: ONS (2010d) Monthy Digest of Statistics, September; ONS (2010c) Labour Market Statistics, September ONS (2006a) Economic Trends, April, and previous issues.

hardly surprising that we noted significant job losses in the manufacturing industry in Table 1.4 since relatively rapid labour productivity growth and static or falling output are invariably associated with reduc­tions in employment.

Table 1.12 provides more detailed productivity data for manufacturing output between 1980 and 2008 for the UK, US, France and Germany.

Table 1.12 Labour productivity in manufacturing (output per hour), 1980-2008 (2002 = 100).

Source: US (2010) International Labor Comparisons, BLS Supplementary Tables.

Although much discussion of the UK’s performance in terms of productivity has centred on the manufac­turing sector, it should be noted that this sector is not a cohesive entity; rather it is made up of many sub­sectors with divergent records over time.

Two further conclusions of the study might also be noted. First, the authors investigated whether changes in overall manufacturing productivity were due to the relocation of resources between sectors (i.e. from low to high productivity sectors) or due to productivity growth within the sectors over time. They concluded that over 90% of the increase in labour productivity was due to within-sector productivity growth. This suggests that explanations of changes in productivity should concentrate on factors which affect produc­tivity within industries and even plants. Second, the study looked at whether productivities across the various sectors of manufacturing have tended to con­verge. They concluded that whilst productivity in a number of sectors appeared to settle at levels just below the manufacturing mean, the productivities of a few sectors (such as computing, pharmaceuticals and aerospace) remained consistently above the mean and tended to move further above the mean over time.

Despite these differential performances between sectors within UK manufacturing, the UK falls behind the US, Germany and France in absolute labour produc­tivities in most of the subsectors of manufacturing.