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What is Productivity ?

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Nimrod103
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Re: What is Productivity ?

#100541

Postby Nimrod103 » December 1st, 2017, 2:04 pm

dspp wrote:For my sins I get to go into various factories around the world.

On a like-for-like basis the UK factories I see are low productivity zones due to an under-investment in capital goods (machinery) and a resulting lack of automation, i.e. labour substitutes for capital. The typical UK employee in these factories is lower skilled, i.e. they would not be able to run the factory machinery in the corresponding non-UK factiry without substantial training. Many of them do not have the basic education (or inclination) to accept that training, and of course in any case if the capital investment were to be made the result would be to eject many of them from the workforce (replaced by machinery). This goes back 80-90 years, it is not a recent phenomenon.

Up to a point that is to be expected. But what is not being acknowledged is the scale of the issue facing the UK. Take Brazil as the comparison with a per capita GDP of $15k vs the UK per capita GDP of $40k. So the UK worker needs to upskill and to take a two-thirds salary cut in order to get to level-peg with a country that is considered a middle-income-trap candidate. Now if you were a factory owner considering an investment in a piece of machinery and you had to choose between putting it in the UK or in Brazil, why on earth would you choose the UK. Why on earth would you risk your capital on the UK workforce upskilling and taking a 2/3 salary cut just to get to a level-peg outcome. It is a no-brainer: you don't gamble, the investment goes into Brazil, or China, or Bulgaria, or Ukraine, or Mexico, or India. I go to many of these places by the way.

Doesn't developed Europe like Germany have the same problems with competing with undervoped manufacturing countries in Eastern Europe and Asia? This is not a phenomenon restricted to the UK.

So that does indeed leave a load of unproductive people who are already under-employed and who will become even more under-employed. One small welding factory I know in the UK has about 40 staff all doing hand work. I know the jobs going through it and they cry out to be replaced by robots, so down to half a dozen staff and three dozen unemployed. That factory is in the supply chain of one of the companies the pro-Brexit lot la-la about by-the-way. It happens to be kept going by the skills of about 20% of the staff who are non-UK nationals and who are prepared to do the nightshifts thereby keeping utilisation up - without them the factory is likely to go pop. So either way you cut it I see that factory ejecting three dozen UK semi-skilled (20k-£30k/yr) staff out and there are not jobs in the local economy for them.

I listened to a r4 Today interview recently where the respondent was simultaneously bemoaning the lack of primary school teachers and the number of under/unemployed. They mentioned as an aside the lack of skills/education/capacity of many of the unemployed (my memory was they talked about learning disabilities). So get me right: they think that a good outcome is to take people with learning disabilities (whatever they are) and make them the primary school teachers of the next generation, oh and on of course good wages which are public sector payroll.

Strange because I would have thought teaching was an attractive profession with good benefits, for which there should be many applicants, considering the number of graduates this country produces. Yet from family experience, many secondary schools cannot get good teachers, and there is an amazing amount of staff turnover. AIUI much of this can be attributed to a very challenging work environment with difficult to control and motivate kids, poor support from senior staff, and a PC and box ticking culture which seems to ignore why kids are in school to start with. OTOH I would have thought primary schools would have a better environment and therefore be more successful in retaining staff.

Basically the UK has to get real with itself that the journey it has been on for the last 40-years has barely begun. During those 40-years the UK has just about kept afloat courtesy of the Thatcher era changes and the gift that kept giving of North Sea oil. Both have run out of steam, hence the ever-weakening pound (take the long view and call up a 40-yr chart) and the perennial balance of trade deficit (they are the two sides of the same story). You do realize that the period of the petropound caused a huge rise in the exchange rate, and it was that more than anything else which decimated UK manufacturing under Thatcher?

My personal opinion is that the Brexit vote was by-and-large a vote against globalisation. The bad news is that the journey is not over and the UK has just switched to the high-pain pathway. Income disparities will go up (not down) as a result, and it is likely that unemployment and underemployment will increase. Any gains, such as they are, will accrue even more to London - there have been no economic uplifts outside of the London/SE area to really speak of in my working lifetime (absent a very few pockets), and I expect that to get worse.
My take on the Brexit vote was that outside of the SE and particularly financial sector driven London, the UK regions were being hammered by too high an exchange rate, and failure of the Govt to understand the importance of business in general and manufacturing in particular to provide jobs and livelihoods in these areas. It is IMHO a hangover from the Gordon Brown model of the UK economy, which held that the Govt could raise huge taxes from the banks and the like, to pay for vote winning projects and make work schemes, and therefore didn't have to worry about dirty industry. With the financial sector crashed, Britain has to learn how to make things again.

How to fix it ? Well being honest about where the UK is is a good place to start, and heading in a different direction that the utterly stupid Brexit direction is a better pathway to take. But even with that it is going to hurt a lot more. With those two encumbrances it is going to be very bad indeed for most UK people.
I think the competitive exchange rate is already fixing it (http://www.telegraph.co.uk/business/201 ... facturing/)
regards, dspp

[edit : macroecomic productivity = GDP/people, i.e. per capita GDP. That is why I used the GDPpc numbers above. But before you all shout at me and say that shows UK is 3x as productive as Brazil, what you have to recall is that the UK is highly skewed upwards by the City etc, and Brazil is skewed downwards by last generation of rural poor, i.e. the trend is against the UK. That is the problem for the UK]

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Re: What is Productivity ?

#100571

Postby dspp » December 1st, 2017, 3:37 pm

Nimrod103 wrote:
dspp wrote:For my sins I get to go into various factories around the world.

On a like-for-like basis the UK factories I see are low productivity zones due to an under-investment in capital goods (machinery) and a resulting lack of automation, i.e. labour substitutes for capital. The typical UK employee in these factories is lower skilled, i.e. they would not be able to run the factory machinery in the corresponding non-UK factiry without substantial training. Many of them do not have the basic education (or inclination) to accept that training, and of course in any case if the capital investment were to be made the result would be to eject many of them from the workforce (replaced by machinery). This goes back 80-90 years, it is not a recent phenomenon.

Up to a point that is to be expected. But what is not being acknowledged is the scale of the issue facing the UK. Take Brazil as the comparison with a per capita GDP of $15k vs the UK per capita GDP of $40k. So the UK worker needs to upskill and to take a two-thirds salary cut in order to get to level-peg with a country that is considered a middle-income-trap candidate. Now if you were a factory owner considering an investment in a piece of machinery and you had to choose between putting it in the UK or in Brazil, why on earth would you choose the UK. Why on earth would you risk your capital on the UK workforce upskilling and taking a 2/3 salary cut just to get to a level-peg outcome. It is a no-brainer: you don't gamble, the investment goes into Brazil, or China, or Bulgaria, or Ukraine, or Mexico, or India. I go to many of these places by the way.

Doesn't developed Europe like Germany have the same problems with competing with undervoped manufacturing countries in Eastern Europe and Asia? This is not a phenomenon restricted to the UK. It is not as simple as this. Continental Europe has increased its prodctivity and continued to do so, it is now about 20% higher than UK. So there is more to it than this.

So that does indeed leave a load of unproductive people who are already under-employed and who will become even more under-employed. One small welding factory I know in the UK has about 40 staff all doing hand work. I know the jobs going through it and they cry out to be replaced by robots, so down to half a dozen staff and three dozen unemployed. That factory is in the supply chain of one of the companies the pro-Brexit lot la-la about by-the-way. It happens to be kept going by the skills of about 20% of the staff who are non-UK nationals and who are prepared to do the nightshifts thereby keeping utilisation up - without them the factory is likely to go pop. So either way you cut it I see that factory ejecting three dozen UK semi-skilled (20k-£30k/yr) staff out and there are not jobs in the local economy for them.

I listened to a r4 Today interview recently where the respondent was simultaneously bemoaning the lack of primary school teachers and the number of under/unemployed. They mentioned as an aside the lack of skills/education/capacity of many of the unemployed (my memory was they talked about learning disabilities). So get me right: they think that a good outcome is to take people with learning disabilities (whatever they are) and make them the primary school teachers of the next generation, oh and on of course good wages which are public sector payroll.

Strange because I would have thought teaching was an attractive profession with good benefits, for which there should be many applicants, considering the number of graduates this country produces. Yet from family experience, many secondary schools cannot get good teachers, and there is an amazing amount of staff turnover. AIUI much of this can be attributed to a very challenging work environment with difficult to control and motivate kids, poor support from senior staff, and a PC and box ticking culture which seems to ignore why kids are in school to start with. OTOH I would have thought primary schools would have a better environment and therefore be more successful in retaining staff. I think there are many UK-specific social factors behind this. However I am very unsure re this area, it is not my specialty.

Basically the UK has to get real with itself that the journey it has been on for the last 40-years has barely begun. During those 40-years the UK has just about kept afloat courtesy of the Thatcher era changes and the gift that kept giving of North Sea oil. Both have run out of steam, hence the ever-weakening pound (take the long view and call up a 40-yr chart) and the perennial balance of trade deficit (they are the two sides of the same story). You do realize that the period of the petropound caused a huge rise in the exchange rate, and it was that more than anything else which decimated UK manufacturing under Thatcher?
To an extent yes, to an extent no. Take for example motor mfg - we had to give away our motor industry to foreigners in order for them to fix it for us, albeit largely as screwdriver plants. We couldn't even give away the shipyards. So a lot of the blame is not petropound related (as in any case we pretty much sterlised it through wasteful dole queues straight off. More important imho is the effect of the City which is as a continent-scale finserv hub cannot be well accomodated in a small (UK) state without skewing the economy. Contrast with say New York where it only skews one state leaving most of the other fifty or so largely unaffected. Basically the Londonistas wipe out the rest of the UK but then have to carry the burden.

My personal opinion is that the Brexit vote was by-and-large a vote against globalisation. The bad news is that the journey is not over and the UK has just switched to the high-pain pathway. Income disparities will go up (not down) as a result, and it is likely that unemployment and underemployment will increase. Any gains, such as they are, will accrue even more to London - there have been no economic uplifts outside of the London/SE area to really speak of in my working lifetime (absent a very few pockets), and I expect that to get worse.
My take on the Brexit vote was that outside of the SE and particularly financial sector driven London, the UK regions were being hammered by too high an exchange rate, and failure of the Govt to understand the importance of business in general and manufacturing in particular to provide jobs and livelihoods in these areas. It is IMHO a hangover from the Gordon Brown model of the UK economy, which held that the Govt could raise huge taxes from the banks and the like, to pay for vote winning projects and make work schemes, and therefore didn't have to worry about dirty industry. With the financial sector crashed, Britain has to learn how to make things again.
You can't break a mfg etc balanced economy over decades and then restart it in a year or even a decade. It is the machinery investment issue writ large: why invest in mfg (etc) in UK if you know in advance that you are going to get whipsawed to death by currency fluctuations driven by the City that are beyond mfgs control. This is why imho it would have been correct for the UK to have joined Eurozone so that wider UK economy would have had a stable currency to operate in.


How to fix it ? Well being honest about where the UK is is a good place to start, and heading in a different direction that the utterly stupid Brexit direction is a better pathway to take. But even with that it is going to hurt a lot more. With those two encumbrances it is going to be very bad indeed for most UK people.
I think the competitive exchange rate is already fixing it (http://www.telegraph.co.uk/business/201 ... facturing/) Yes but as a manufacturer I cannot rely on it - I have to buy machinery with a 20-yr view. Why should I put my capital at risk to look after some UK hinterland that is making it harder (not easier) for me to do my work as an exporter.

regards, dspp

[edit : macroecomic productivity = GDP/people, i.e. per capita GDP. That is why I used the GDPpc numbers above. But before you all shout at me and say that shows UK is 3x as productive as Brazil, what you have to recall is that the UK is highly skewed upwards by the City etc, and Brazil is skewed downwards by last generation of rural poor, i.e. the trend is against the UK. That is the problem for the UK]

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Re: What is Productivity ?

#100575

Postby redsturgeon » December 1st, 2017, 3:48 pm

To an extent yes, to an extent no. Take for example motor mfg - we had to give away our motor industry to foreigners in order for them to fix it for us, albeit largely as screwdriver plants. We couldn't even give away the shipyards.


This bit always fascinates me. Why is it that F1 racing which surely represents the pinnacle of motor engineering is so dominated by the UK based teams? But we are reduced to bolting together mass produced cars.

JOhn

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Re: What is Productivity ?

#100578

Postby Nimrod103 » December 1st, 2017, 3:52 pm

dspp wrote:
Nimrod103 wrote:
dspp wrote:For my sins I get to go into various factories around the world.

On a like-for-like basis the UK factories I see are low productivity zones due to an under-investment in capital goods (machinery) and a resulting lack of automation, i.e. labour substitutes for capital. The typical UK employee in these factories is lower skilled, i.e. they would not be able to run the factory machinery in the corresponding non-UK factiry without substantial training. Many of them do not have the basic education (or inclination) to accept that training, and of course in any case if the capital investment were to be made the result would be to eject many of them from the workforce (replaced by machinery). This goes back 80-90 years, it is not a recent phenomenon.

Up to a point that is to be expected. But what is not being acknowledged is the scale of the issue facing the UK. Take Brazil as the comparison with a per capita GDP of $15k vs the UK per capita GDP of $40k. So the UK worker needs to upskill and to take a two-thirds salary cut in order to get to level-peg with a country that is considered a middle-income-trap candidate. Now if you were a factory owner considering an investment in a piece of machinery and you had to choose between putting it in the UK or in Brazil, why on earth would you choose the UK. Why on earth would you risk your capital on the UK workforce upskilling and taking a 2/3 salary cut just to get to a level-peg outcome. It is a no-brainer: you don't gamble, the investment goes into Brazil, or China, or Bulgaria, or Ukraine, or Mexico, or India. I go to many of these places by the way.

Doesn't developed Europe like Germany have the same problems with competing with undervoped manufacturing countries in Eastern Europe and Asia? This is not a phenomenon restricted to the UK. It is not as simple as this. Continental Europe has increased its prodctivity and continued to do so, it is now about 20% higher than UK. So there is more to it than this.

So that does indeed leave a load of unproductive people who are already under-employed and who will become even more under-employed. One small welding factory I know in the UK has about 40 staff all doing hand work. I know the jobs going through it and they cry out to be replaced by robots, so down to half a dozen staff and three dozen unemployed. That factory is in the supply chain of one of the companies the pro-Brexit lot la-la about by-the-way. It happens to be kept going by the skills of about 20% of the staff who are non-UK nationals and who are prepared to do the nightshifts thereby keeping utilisation up - without them the factory is likely to go pop. So either way you cut it I see that factory ejecting three dozen UK semi-skilled (20k-£30k/yr) staff out and there are not jobs in the local economy for them.

I listened to a r4 Today interview recently where the respondent was simultaneously bemoaning the lack of primary school teachers and the number of under/unemployed. They mentioned as an aside the lack of skills/education/capacity of many of the unemployed (my memory was they talked about learning disabilities). So get me right: they think that a good outcome is to take people with learning disabilities (whatever they are) and make them the primary school teachers of the next generation, oh and on of course good wages which are public sector payroll.

Strange because I would have thought teaching was an attractive profession with good benefits, for which there should be many applicants, considering the number of graduates this country produces. Yet from family experience, many secondary schools cannot get good teachers, and there is an amazing amount of staff turnover. AIUI much of this can be attributed to a very challenging work environment with difficult to control and motivate kids, poor support from senior staff, and a PC and box ticking culture which seems to ignore why kids are in school to start with. OTOH I would have thought primary schools would have a better environment and therefore be more successful in retaining staff. I think there are many UK-specific social factors behind this. However I am very unsure re this area, it is not my specialty.

Basically the UK has to get real with itself that the journey it has been on for the last 40-years has barely begun. During those 40-years the UK has just about kept afloat courtesy of the Thatcher era changes and the gift that kept giving of North Sea oil. Both have run out of steam, hence the ever-weakening pound (take the long view and call up a 40-yr chart) and the perennial balance of trade deficit (they are the two sides of the same story). You do realize that the period of the petropound caused a huge rise in the exchange rate, and it was that more than anything else which decimated UK manufacturing under Thatcher?
To an extent yes, to an extent no. Take for example motor mfg - we had to give away our motor industry to foreigners in order for them to fix it for us, albeit largely as screwdriver plants. We couldn't even give away the shipyards. So a lot of the blame is not petropound related (as in any case we pretty much sterlised it through wasteful dole queues straight off. More important imho is the effect of the City which is as a continent-scale finserv hub cannot be well accomodated in a small (UK) state without skewing the economy. Contrast with say New York where it only skews one state leaving most of the other fifty or so largely unaffected. Basically the Londonistas wipe out the rest of the UK but then have to carry the burden.

I think you are talking down the UK industry. I agree they want a stable exchange rate and low stable interest rates, which is not what they would have had if we had joined the Euro. The ERM experience was close to an economic catastrophe, and taught those with the sense to learn that the UK economy is very much out of sync with the rest of Europe. If we had joined the Euro, we would have ended up as bankrupt as Ireland or Italy or probably worse. It is interesting that the £/Euro exchange rate has been relatively stable since the Referendum, and this is encouraging to investment.

My personal opinion is that the Brexit vote was by-and-large a vote against globalisation. The bad news is that the journey is not over and the UK has just switched to the high-pain pathway. Income disparities will go up (not down) as a result, and it is likely that unemployment and underemployment will increase. Any gains, such as they are, will accrue even more to London - there have been no economic uplifts outside of the London/SE area to really speak of in my working lifetime (absent a very few pockets), and I expect that to get worse.
My take on the Brexit vote was that outside of the SE and particularly financial sector driven London, the UK regions were being hammered by too high an exchange rate, and failure of the Govt to understand the importance of business in general and manufacturing in particular to provide jobs and livelihoods in these areas. It is IMHO a hangover from the Gordon Brown model of the UK economy, which held that the Govt could raise huge taxes from the banks and the like, to pay for vote winning projects and make work schemes, and therefore didn't have to worry about dirty industry. With the financial sector crashed, Britain has to learn how to make things again.
You can't break a mfg etc balanced economy over decades and then restart it in a year or even a decade. It is the machinery investment issue writ large: why invest in mfg (etc) in UK if you know in advance that you are going to get whipsawed to death by currency fluctuations driven by the City that are beyond mfgs control. This is why imho it would have been correct for the UK to have joined Eurozone so that wider UK economy would have had a stable currency to operate in.


How to fix it ? Well being honest about where the UK is is a good place to start, and heading in a different direction that the utterly stupid Brexit direction is a better pathway to take. But even with that it is going to hurt a lot more. With those two encumbrances it is going to be very bad indeed for most UK people.
I think the competitive exchange rate is already fixing it (http://www.telegraph.co.uk/business/201 ... facturing/) Yes but as a manufacturer I cannot rely on it - I have to buy machinery with a 20-yr view. Why should I put my capital at risk to look after some UK hinterland that is making it harder (not easier) for me to do my work as an exporter.

Your choice where to invest. Plenty of others are deciding to invest in the UK.
Do let us know when and where you move.

regards, dspp

[edit : macroecomic productivity = GDP/people, i.e. per capita GDP. That is why I used the GDPpc numbers above. But before you all shout at me and say that shows UK is 3x as productive as Brazil, what you have to recall is that the UK is highly skewed upwards by the City etc, and Brazil is skewed downwards by last generation of rural poor, i.e. the trend is against the UK. That is the problem for the UK]

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Re: What is Productivity ?

#100580

Postby redsturgeon » December 1st, 2017, 3:59 pm

Moderator Message:
Guys! This is getting silly now. Can you please try to edit down when replying.

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Re: What is Productivity ?

#102356

Postby modellingman » December 7th, 2017, 9:27 am

scotview wrote:I would be obliged to get your definition of what "productivity" means to you and do you think the government's initiatives/interventions are going to improve it.


Productivity in the context of national and sub-national economies generally refers to labour productivity as TonyB previously noted. It is usually measured as the ratio of Gross Domestic Product (GDP) per worker or per hour worked. At subnational-levels it is measured using Gross Value Added (GVA) rather than GDP as the output measure, since GDP isn't measured at sub-national levels. GVA and GDP are closely related.

The GVA output measure, in broad terms, comprises earnings of employees (compensation of employees to use the econo-statistical jargon), company profits and other surpluses (e.g. those generated by public sector organisations, charities, etc) and income from self-employment. A more detailed description of the components of GVA can be found on the excellent NOMIS website. GVA excludes welfare payments such as state pensions and unemployment benefits: these are classed as "transfer payments" and are effectively re-distributions of money through the tax and benefits systems. It includes all sectors of the economy that pay for labour, including public sector activities such as health, education and public administration (government). To the consternation of some (such as the New Economics Foundation) it excludes activities such as voluntary work and unpaid household work, bringing up children, looking after aged parents, etc.

ONS produces quarterly bulletin on productivity. Figure 1, from the latest bulletin, shows the nature of the UK's productivity problem - it has flatlined since the Great Financial Disaster, to the extent that it is now around 20% lower than the pre-GFD trend.

Image

Note to Mods: ONS' Terms and Conditions allow reproduction of the image above under the terms of the OGL.

ONS refers to this state of affairs as the "productivity puzzle". The bulletin notes that This term refers to the relative stagnation of labour productivity since the recent economic downturn. This is in contrast with patterns following previous UK economic downturns where productivity initially fell, but subsequently bounced back to the previous trend rate of growth. There is wide and varied economic debate regarding the causes of this puzzle and further analysis of recent UK productivity trends can be found in the January 2016, May 2016 and June 2016 Economic Reviews, as well as in several standalone articles including: What is the productivity puzzle?, The productivity conundrum, explanations and preliminary analysis, and The productivity conundrum, interpreting the recent behaviour of the economy.

So, in short, the great brains of the economists and statisticians at the ONS (and no doubt the the Bank of England, Treasury, the Department for Business, Energy and Industrial Strategy, the Department for Education and others besides) don't really have any explanations much less any policy solutions that might get the UK's productivity back on track. A group of random strangers on an internet bulletin board, each bringing their own views, prejudices and anecdotal experiences, probably ain't going to make much headway.

Why does it all matter?

Although it is a very imperfect measure, GDP (or more strictly GDP per capita) does provide a measure of the country's economic welfare. Using GDP per worker as the productivity measure then GDP per capita is related to productivity through three ratios: employment rate, economic activity rate and the proportion of the population of working age. The third of these is simply the working age population divided by the total population; the economic activity rate is the proportion of the working age population that is "economically active" ie either in employment (including self-employment) or seeking employment, so economically active population divided by working age population; the employment rate is the proportion of economically active people who are actually in employment (including self-employment), so worker population divided by the economically active population. The employment rate is the complement of the unemployment rate, ie when expressed as percentages employment rate = 100 - unemployment rate.

In algebraic terms: GDP/capita = Productivity * Employment Rate * Economic Activity Rate * Proportion of Working Age

Changes in the values on the RHS of the equation all effect the economic welfare measure on the LHS.

The Employment and Economic Activity Rates are at historically high levels so there's not much room left for manoeuvre with these. The proportion of the population of working age is being propped up by net inward migration and by pushing back retirement ages but other policy (net migration to be reduced to <100,000pa) and the boomer generation about to hit retirement will make current levels difficult to sustain. Bottom line: economic growth (both GDP and GDP/capita) will mainly be driven by productivity growth - so weak productivity growth means weak economic growth.

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Re: What is Productivity ?

#102415

Postby redsturgeon » December 7th, 2017, 11:47 am

http://www.independent.co.uk/news/uk/po ... 95851.html

Now we now the truth!

According to Hammond it is the greater participation of disabled people in the workforce that has led to a drop in productivity!

Stephen Hawkins has a lot to answer for...

John

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Re: What is Productivity ?

#102655

Postby Nimrod103 » December 8th, 2017, 8:23 am

redsturgeon wrote:http://www.independent.co.uk/news/uk/politics/hammond-disabled-people-productivity-finding-jobs-employment-effect-comments-a8095851.html

Now we now the truth!

According to Hammond it is the greater participation of disabled people in the workforce that has led to a drop in productivity!

Stephen Hawkins has a lot to answer for...

John


Modelling Man said above:
So, in short, the great brains of the economists and statisticians at the ONS (and no doubt the the Bank of England, Treasury, the Department for Business, Energy and Industrial Strategy, the Department for Education and others besides) don't really have any explanations much less any policy solutions that might get the UK's productivity back on track. A group of random strangers on an internet bulletin board, each bringing their own views, prejudices and anecdotal experiences, probably ain't going to make much headway.

This statement does do some injustice to the "Wisdom of crowds" (Francis Galton), as represented here by a group of random strangers.

My own assessment is that the great brains probably do know the cause of the flatlining of productivity, but are too timid to speak. Hence when Hammond says low productivity is due to high participation rates of the relatively unproductive (a good thing), and makes reference to the disabled (the other low productivity ones being the old and thick), those who wish to take offence, do take offence, and public debate is stifled. Labour MPs listening on the select committee, and socialists on this board, have predictably aimed their fire at the messenger.

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Re: What is Productivity ?

#102811

Postby colin » December 8th, 2017, 5:48 pm

High levels of immigration have a bearing on productivity, when factory owners want to increase the amount of goods they produce/process/package/distribute or whatever they have to make a decision as to what use of technology or increased labor has to be employed to achieve the increase in goods processed, if they choose to employ more people that does not increase productivity (assuming other factors such as efficiency do not change) if factory owners gravitate toward better use of technology then that results in an increase in productivity because the same or fewer numbers of workers produce or process more goods.
The availability of an unlimited supply of cheap labor from East European economies skews the factory owners decision toward favoring increased labor over expensive technology to achieve that increase in goods produced/processed or whatever.

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Re: What is Productivity ?

#103086

Postby OLTB » December 10th, 2017, 8:24 am

I was talking to a chap recently who has an interest in Management and we were talking about productivity. He alluded that in the UK, if someone is promoted to say a supervisory position, they learn how to do that job by the incumbent. The issue is that they also pick up that supervisor's bad habits / work practices that may have also been passed on to them on an historical basis. He then went on to say that in Germany (and possibly other countries) they have a specific vocational training and qualification to be a supervisor where someone can learn the role and best practices, rather than be trained up and take on the bad habits as mentioned above.

I'm taking this chap's word for the above, I have no experience, and it sounded such a simple thing to try and change for the UK. Certainly my experiences of promotion have been to learn from the person I am taking over from, rather than a third party.

Cheers, OLTB.

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Re: What is Productivity ?

#103096

Postby redsturgeon » December 10th, 2017, 9:57 am

OLTB wrote:I was talking to a chap recently who has an interest in Management and we were talking about productivity. He alluded that in the UK, if someone is promoted to say a supervisory position, they learn how to do that job by the incumbent. The issue is that they also pick up that supervisor's bad habits / work practices that may have also been passed on to them on an historical basis. He then went on to say that in Germany (and possibly other countries) they have a specific vocational training and qualification to be a supervisor where someone can learn the role and best practices, rather than be trained up and take on the bad habits as mentioned above.

I'm taking this chap's word for the above, I have no experience, and it sounded such a simple thing to try and change for the UK. Certainly my experiences of promotion have been to learn from the person I am taking over from, rather than a third party.

Cheers, OLTB.


As with much anecdotal "evidence", I'm sure that in some situations, what has been described above happens absolutely but there are many other situations where it does not.

Any well run organisation, and contrary to popular opinion there are many of them in the UK, will have standard operating procedures (SOPs) to carry out their roles. These will have been developed to optimise the performance of the role and to remove individual variations. There may be some inbuilt national differences in the way such SOPs are followed in the UK vs say Germany but I can only say from my own experience, management roles and the training for them was taken very seriously in the organisations in which I have worked.

John

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Re: What is Productivity ?

#103097

Postby redsturgeon » December 10th, 2017, 9:57 am

OLTB wrote:I was talking to a chap recently who has an interest in Management and we were talking about productivity. He alluded that in the UK, if someone is promoted to say a supervisory position, they learn how to do that job by the incumbent. The issue is that they also pick up that supervisor's bad habits / work practices that may have also been passed on to them on an historical basis. He then went on to say that in Germany (and possibly other countries) they have a specific vocational training and qualification to be a supervisor where someone can learn the role and best practices, rather than be trained up and take on the bad habits as mentioned above.

I'm taking this chap's word for the above, I have no experience, and it sounded such a simple thing to try and change for the UK. Certainly my experiences of promotion have been to learn from the person I am taking over from, rather than a third party.

Cheers, OLTB.


As with much anecdotal "evidence", I'm sure that in some situations, what has been described above happens absolutely but there are many other situations where it does not.

Any well run organisation, and contrary to popular opinion there are many of them in the UK, will have standard operating procedures (SOPs) to carry out their roles. These will have been developed to optimise the performance of the role and to remove individual variations. There may be some inbuilt national differences in the way such SOPs are followed in the UK vs say Germany but I can only say from my own experience, management roles and the training for them was taken very seriously in the organisations in which I have worked.

John

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Re: What is Productivity ?

#103370

Postby modellingman » December 11th, 2017, 1:46 pm

Nimrod103 wrote:Modelling Man said above:
So, in short, the great brains of the economists and statisticians at the ONS (and no doubt the the Bank of England, Treasury, the Department for Business, Energy and Industrial Strategy, the Department for Education and others besides) don't really have any explanations much less any policy solutions that might get the UK's productivity back on track. A group of random strangers on an internet bulletin board, each bringing their own views, prejudices and anecdotal experiences, probably ain't going to make much headway.

This statement does do some injustice to the "Wisdom of crowds" (Francis Galton), as represented here by a group of random strangers.


Not at all.

A large group's aggregated answers to questions involving quantity estimation, general world knowledge, and spatial reasoning has generally been found to be as good as, and often better than, the answer given by any of the individuals within the group.

The classic wisdom-of-the-crowds finding involves point estimation of a continuous quantity. At a 1906 country fair in Plymouth, 800 people participated in a contest to estimate the weight of a slaughtered and dressed ox. Statistician Francis Galton observed that the median guess, 1207 pounds, was accurate within 1% of the true weight of 1198 pounds. This has contributed to the insight in cognitive science that a crowd's individual judgments can be modeled as a probability distribution of responses with the median centered near the true value of the quantity to be estimated.


Excerpted from: Wikipedia - Wisdom of the crowd



The post you quoted was the 25th on this thread, so after the OP, who asked a question without offering an opinion, there were 23 posts prior to my own. A good number of these were devoted to (i) the discussion between you and vrdiver about whether turning the heating up and leaving the lights on increased national productivity or not and (ii) a separate discussion between you and dspp related to various aspects of his original post - none of which directly addressed solutions to the "productivity puzzle". Setting aside redsturgeon's 3 posts (2 of which asked questions with the other being a mod intervention) that leaves 10 contributions from 7 contributors (including yourself) which addressed the question of the underlying causes of the productivity puzzle but none of which offered any sort of policy solution. If you have a different analysis, please feel free to report it.

I don't judge 7 to be a large group. I also judge that providing explanations for and solutions to the productivity puzzle is a far more complex matter than dealing with questions of quantity estimation, general world knowledge, spatial reasoning and similar. Therefore, I reject your assertion that my view about the efficacy of "a group of random strangers on an internet bulletin board" does injustice to either to Francis Galton or the general concept of the wisdom of crowds .

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Re: What is Productivity ?

#106803

Postby colin » December 30th, 2017, 12:52 pm

I also judge that providing explanations for and solutions to the productivity puzzle is a far more complex matter than dealing with questions of quantity estimation, general world knowledge, spatial reasoning and similar.



Well I do not think the productivity problem is that complicated its just that the underlying cause is too politically explosive for so called economists to discuss, the kind of economists who make pronouncements in public know full well that there are things politicians just do not want to hear.
As long as an unlimited supply of cheap labor from less well developed economies is available then why would business owners worry about increasing productivity per worker to meet rising demand when it's cheaper to just bring in more unskilled labor to perform menial machine like tasks. Increasing productivity is not free it involves investing in technology and training, employment agencies can provide a limitless supply of minimum wage labor to meet increasing demand so why bother with the machines and the training?
The solution, as many of us who voted for Brexit, know full well, is obvious. Cut off the endless supply of unskilled workers then the economy will have to use skilled workers and technology to produce the same or more goods and services. Ergo productivity increases.

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Re: What is Productivity ?

#106826

Postby vrdiver » December 30th, 2017, 4:53 pm

colin wrote:The solution, as many of us who voted for Brexit, know full well, is obvious. Cut off the endless supply of unskilled workers then the economy will have to use skilled workers and technology to produce the same or more goods and services. Ergo productivity increases.


Unless of course, the employer moves production to where the unskilled labour can be sourced...

Sadly, it may be more complicated than that. I've heard that farmers are worried about being put out of business if they lose their migrant workers. You'd think it would be a push to get technology into the fields, replacing mind-numbing, backbreaking, repetitive jobs, but no, the worry is that the supermarkets will just import cheaper food from abroad.

Same problem with some assembly work I was involved in: if the local labour costs go up, it becomes cheaper to import pre-assembled components etc. The balance is quite precarious. If tariffs kick in, then they may well be less than the increased local labour costs, especially when the UK is already at "full" employment and unskilled labour goes into short supply.

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Re: What is Productivity ?

#106837

Postby colin » December 30th, 2017, 6:21 pm

Sadly, it may be more complicated than that. I've heard that farmers are worried about being put out of business if they lose their migrant workers. You'd think it would be a push to get technology into the fields, replacing mind-numbing, backbreaking, repetitive jobs, but no, the worry is that the supermarkets will just import cheaper food from abroad.


It's not as complicated as farmers make out, decades ago i used to pick fruit in orchards and the piece work paid well for those who could pick quickly, certainly much more than minimum wage today. The reason that it paid well was that the orchard owners had to compete with each other for the labor required to get the harvest in and off to market. Today there is no such competition for labor and the return of such competition is what these business owners fear because that drives up their costs.

But that's another issue , as far as using technology to increase productivity where labor costs are high then that provides the economic incentive to develop the technologies which would increase productivity. If labor costs are low then why bother?

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Re: What is Productivity ?

#106838

Postby vrdiver » December 30th, 2017, 6:31 pm

colin wrote:If labor costs are low then why bother?


Exactly. The issue is that if labour costs rise in the UK, then the impetus to invest in technology (and by implication, improved GDP per capita) is in competition with the impetus to switch out of UK produced goods and into cheaper foreign-produced imports.

Tariffs may help sway the balance in favour of domestic production, but we've seen before that protected industries tend to underperform and have less innovation, which ultimately leads to their decimation...

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Re: What is Productivity ?

#106879

Postby colin » December 30th, 2017, 9:55 pm

Exactly. The issue is that if labour costs rise in the UK, then the impetus to invest in technology (and by implication, improved GDP per capita) is in competition with the impetus to switch out of UK produced goods and into cheaper foreign-produced imports.


So the outcome of your argument is that we have to endure low productivity relative to other developed economies because the alternative to using cheap labor in the domestic market is that we import everything ? Who really thinks that is a sensible position?

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Re: What is Productivity ?

#106891

Postby vrdiver » December 31st, 2017, 1:33 am

colin wrote:
Exactly. The issue is that if labour costs rise in the UK, then the impetus to invest in technology (and by implication, improved GDP per capita) is in competition with the impetus to switch out of UK produced goods and into cheaper foreign-produced imports.


So the outcome of your argument is that we have to endure low productivity relative to other developed economies because the alternative to using cheap labor in the domestic market is that we import everything ? Who really thinks that is a sensible position?



Not quite! I personally believe we need to change the incentives for increasing productivity; anything and everything from an overhaul of the business framework that entrepreneurs work in, through to our education system and moral teachings such that our citizens have less of an "it's my right" stance and more of an "I want success and understand that it involves work" attitude.

Just adjusting the market availability of cheap labour in and of itself is, IMHO, a sticking plaster that doesn't address the underlying issues. Why do employers say they can't get UK staff who have the same work ethic as migrants?

As an unrelated aside, I was listening to Jeremy Vine on Radio 2, when there was a discussion about the state that public toilets for disabled users were in. Whilst many callers wanted "something done about it" not one mentioned that it is basic manners to leave a toilet as you found it and that the issue lies within our own citizenry, not the organisations who provide these amenities.

I mention this as it sums up so many issues where we, as a nation, seem to have lost the ability to take responsibility, always expecting somebody else to clear up after us, whether it's a public convenience or getting out of bed to turn up for a job you don't particularly like in order to not be unemployed, self respect has changed out of recognition in the last 50 years.

(Just read the above and realise I am in rant mode....)

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Re: What is Productivity ?

#107034

Postby colin » December 31st, 2017, 4:37 pm

Just read the above and realise I am in rant mode....)


Yes quite... and ranting about other peoples morals is just a symptom of impotent frustration. It's also misplaced, I have worked with many immigrants from eastern Europe and elsewhere they are just people like the rest of us and do the job that's required of them same as the Brits I work with. Where business's have problems getting reliable labor from the domestic market it's not because Brits are lacking moral fiber it's because no one with a choice wants to be used as a human machine for minimum wage. That option needs to be turned off for business owners , it might make economic sense for owners and shareholders in the short term in the long term it can only create a huge and growing underclass of low paid workers
Just adjusting the market availability of cheap labour in and of itself is, IMHO, a sticking plaster that doesn't address the underlying issues


The easy importation of cheap unskilled labor is absolutely the issue, how can it not be , its virtually tautological , unskilled labor = low productivity. It is not complicated. Yes the complicated bit is getting out of this situation because we have let it progress so far . It's not just East Anglian farmers who have become dependent on immigrant labor its any business that can make use of such labor as an alternative to using more efficient means of production.


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