Productivity.

[Jocko]

I am getting on my high horse here, but once again the British media - and the BBC in particular - are feeding us fake news.
Today I was listening to the BBC reporter rambling on about why productivity is falling in the UK and rising in the rest of Europe. What kack. The announcement in the budget, by the chancellor, that production forecast will be reduced from 2% to 1.5% is not a FALL in production but a reduction in the forecast RISE in production.
If a man makes 1000 washers an hour now, and makes 1020/hr next year, that is a 2% rise. If he makes 1015/hr next year that is a 1.5% rise. Even if he still makes 1000/hr it is still not a drop in production. Only if he fails to make 1000/hr has production fallen.
The British media and the BBC continually dis the UK in whatever way they can. Journalists, for the most part, are a shower of ***kers.
Rant over for today.

[sparky Paul]

Productivity has been falling against an index of other nations.

They seem to think they have to present news in a way that your average numbskull can understand, even if that does make it factually incorrect.

[Jocko]

The way the media spins it is that the British work force is getting lazy and cannot be bothered working. Nothing is further from the truth. The truth is the UK is being measured against economies that are able to invest in new equipment and tech whereas our industry uses old clapped out tooling and machinery due to lack of investment by the money men, banks and government. There is no point in boasting about having some of the worlds cleverest engineers and scientists if the business owners are not prepared to invest in their knowledge.
The blame should not be laid at the feet of the British workforce but those of the CBI and the like.

[culzean]

The way the media spins it is that the British work force is getting lazy and cannot be bothered working. Nothing is further from the truth. The truth is the UK is being measured against economies that are able to invest in new equipment and tech whereas our industry uses old clapped out tooling and machinery due to lack of investment by the money men, banks and government. There is no point in boasting about having some of the worlds cleverest engineers and scientists if the business owners are not prepared to invest in their knowledge.
The blame should not be laid at the feet of the British workforce but those of the CBI and the like.

Part of the reason UK productivity lags is that we give jobs priority, we would rather have people in work than unemployed (even if a lot of jobs are minimum wage) , unemployment in France is almost 10%,  in UK it is 4%,  so France has higher productivity than us but we have more people in work,  so if you count the number of people it takes to make a widget, it will take more in UK.   Our car factories are well up among the most efficient and productive in the world.

When I was young I worked with an engineer who was employed by Fairy Aviation during WW2,  he said just after the war people in suits with clipboards came round their factory and tagged some of their best, most modern machines,  he asked what they were doing and his gaffer said 'the tagged machines are going to Germany as reparations for the war',  because in law we declared war on Germany.   This happened all over UK.  Volkswagen was also rebuilt and set up by the British army, as well as other things.   We must be the worlds stupidest country in some respects................

[ColinS]

We must be the worlds stupidest country in some respects................

Yes this is probably true.  But we are most certainly one of the world's most compassionate counties.  Life isn't all about money.

[guest1372]

Well the line on the graph is going to be lower than original estimates - as Evan Davis helpfully points out, that's lower than Italy and Canada who are not really known for dynamic economies. "What, we're lower than the French!" chips in from the other end of the sofa.  Ah yes, quite a bit lower - we were growing more quickly to close the productivity gap but were still a long way behind, now that gap is increasing again.

UK productivity shortfall with the G7 stable in 2016: Current price GDP per hour worked
On this basis, UK productivity in 2016 was:
lower than that of the US by 21.8%
lower than that of France by 22.3%
lower than that of Germany by 25.6%  **
lower than that of the rest of the G7 by 15.1%

The big concern for spreadsheet Phil are tax receipts in 2020-21 will be £20bn lower than previously budgeted for in April 2016*, the gloominess also stems from the fact UK productivity has been pretty much flat for the last decade whereas the rate of growth has picked up in other G7 nations.  The shortfall in income tax & corporation tax has been pretty stark.


I really don't think we can expect much investment in the UK with regards to current uncertainties; since the 2008 crisis direct investment by UK institutions has been hampered by QE and various liquidity reforms - I'd expect large pension funds such as BAe Systems to be invested in the UK rather than £5bn in the red, what might be heralded as foreign investment has led to profits (and tax receipts) taken offshore ~ Cadbury, JLR, ARM Holdings etc.

What does annoy me is this front page commentary in The Telegraph budget issue: "Forecasts are only forecasts there to be proved wrong....  and as likely as not....  things are about to change for the better, with output per man-hour surging forward anew."  I think we should suspend this fantasy peddled to 17.5m people, we need more experts and should start educating some right now.
--
TG

*   That's before we even think about the 'divorce bill'
**  UK workers do less hours than the US, but more than France & Germany
*** Productivity methodology indicates that it is independent of employment rates

Sources:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/bulletins/labourproductivity/apriltojune2017
http://www.pensionsage.com/pa/BAE-System-DB-deficit-drops-to-5-9bn.php
http://www.telegraph.co.uk/news/2017/11/23/economic-outlook-gloomy-proved-wrong/

[guest1372]

.... that production forecast will be reduced from 2% to 1.5% is not a FALL in production but a reduction in the forecast RISE in production.

We might still be going forward but we're at the back of the race and they're all going faster and we're running out of puff.

https://data.oecd.org/chart/50yz
--
TG

[culzean]

Investment has always been a problem in UK industry.   Industry is a dirty word in the country that invented it,  most UK investors are looking for quick returns will not invest in capital equipment that may take years to pay back. And why train people when we have had a supply of cheap labour from EU countries.  This country is a great place for inventing things,  but the problem has always been getting investors,  and normally the ideas go overseas to get it and other countries make money out of the products.

Our governments have always preferred banking and services because they are seen as clean and low carbon, Labour governments will keep spending until they run out of other peoples money and then conservatives have to step in and get the economy in some kind of shape,  which normally means austerity and then they are seen as 'the bad guys'.

[Jocko]

I really don't think we can expect much investment in the UK with regards to current uncertainties; since the 2008 crisis direct investment by UK institutions has been hampered by QE and various liquidity reforms

We haven't had investment in UK industry for almost 70 years. The government have never really been all that interested in boosting industry. As culzean says, they would rather support banking and services. Well that has come back to bite them!
Bringing trained people in from other counties rather than training our own is the reason why the government is desperate for EU immigrants not to go home. They are not worried about expats in Europe. Just worried we are left short of trained people.

[guest5079]

You can hardly expect good old Joe to flog his guts out when he is being paid sometimes 6 times less than a suit. The British worker was always known as a good bet always trying his best. Recently I received a 'funny' Email from a friend this had come from Canada. I say funny as most are humorous  but this one was straight into the bin. Not because I found the subject objectional it was just so upsetting. We have had the disaster at Grenfell towers but it transpires that a considerable number of tenants were not indigenous Brits. Some even were sub letting.  Back to the video, it was the National Anthem to new words. Basically, involving such as 'you come over here and we give you a flat, you come over here and we give you money' and so on. How can a person, born in this country, get married and have children forced to live in private accommodation perhaps having two jobs and being told he might get social housing in 10 yrs. Along comes a  so called refugee and gets housing straight away. Britain has always been at the forefront when giving but come on isn't about time some one called enough.We just can't carry on as we are. As it has been put Labour spend others money till it runs out, they get kicked out and the Conservatives come along trying to sort the mess out. Then Labour get in because people are fed up with austerity. We have 27? other countries teaching us a lesson  because their money pit is leaving. Plenty has been said about the lack of investment but all the time a banker gets a £6,000,000 bonus and Joe is on minimum wage, why should Joe put his self out. In my working years I have always tried to remain in work, sometimes the jobs were quite dreadful BUT it was the way I was brought up.  After the police decided a nutter was no longer viable I was pensioned off. I trained to be a Adult Tutor teaching people to read and write, no pay but my Dr felt it would help. I was reported to the DWP for 'working' 2 hrs a week no pay. So that was that. No discussion, there is not enough space to relay the stupidity of the DWP official. I might not have much use but I could at least help some disadvantaged but no out came the rule book. Sorry I just get so ticked about the crass stupidity that is prevalent in the jobs worth suits that control this country. My young sister in law is Downes syndrome with end stage dementia, the staff where she lives are quite incredible looking after 7 adults all with problems, one works 3 jobs to keep going. Mencap/Cornwall Council pay these gallant souls the princely minimum wage. I would like to see some of these TV presenters Bankers, Accountants etc do this job for that money, I know I would not. I had enough of clearing up mess caused by idiots.That I could distance myself from.  No I am not radical nor reactionary but it has all got to be more than a bit silly ( for the want of a better word). What happened to the report of  the Mini factory and it's excellent productivity was it squashed in case it upset the parent companies workers in Germany.

[culzean]

I used to work for UK branch of German company and one of their engineers said the problem with British companies is that they will tell people about problems with their equipment (maybe what the equipment will not do) where German companies will only tell prospective customers the good things and omit anything negative.  For this reason people still have the impression that VW, Audi, BMW etc are still the worlds most advance and reliable cars.  Most German car factories used to (and maybe still do) rely almost entirely on Turkish and other immigrant workers (whether they are allowed German citizenship is another question).

Our manufacturers do have a bit of an inferiority complex when it comes to British products.  Many years ago my older brother  had a posting to Toyota in Burnaston to monitor the pressing shop when different  kinds of steel were being pressed,  what he found was the press shop were tearing their hair out trying to get consistently good pressings when using Japanese and steel from other countries (pressings would split, develop crease lines and thin out - reducing strength),  but when they changed to British steel their problems went away.

[John Ratsey]

I consider that increasing the retirement age could be a factor as declining energy reduces the benefit of accumulated knowledge and wisdom (assuming this is relevant to the work being done). Declining individual productivity should be offset by a reduction in salary / wages but rarely is, particular where people are in final salary pension schemes. Statistics might reveal that the most productive era for many businesses was 20 or so years ago when retirement ages were being reduced and it was easier to prune some of the older dead wood and left the younger shoots flourish.

[Kenneve]

I certainly take issue with John Ratsey's comment about the older worker being dead wood, what price experience?

[culzean]

I certainly take issue with John Ratsey's comment about the older worker being dead wood, what price experience?

Agree, we have a massive skills gap and as older workers retire they take their knowledge with them. This country stopped training people decades ago, relying instead on cheaper labour from EU. Also many people now are getting degrees, which keeps them out of Labour market till they are older (and out of unemployment statistics which suits the government ) and when they do get a job they think their degree entitles them to go straight in at management level (fast tracking), even though they have no experience. When I was interviewing people you looked for relevant experience, a degree was actually sometimes a bar to getting a job. One of the design offices I worked in did employ some graduates, but non of them lasted more than 6 months because their lack of experience and inability to listen to more experienced designers rendered them as dead wood at the age of less than 30.  The best graduates I have known have worked while studying for their degree, its a hard slog but they are all the better for it.   If it can't be done on a computer many younger people are lost, its just as though they never taught them at school that someday they would have to work for a living and employers may expect value for money. And how can teachers train people to be useful to business when they themselves have no experience, and a lot of teachers have been in the school environment from age 5 and never left it.

[Jocko]

But the whole think is the Productivity of the British worker IS NOT FALLING. It is just not rising as quickly as workers in other countries where investment in industry is higher.

With regard to what culzean says about German companies talking up their product. I remember when VW introduced the 6 year anti rust warranty. It transpired that they did NOTHING to the vehicles. It was just that the increase in sales more than paid for the warranty repairs they had to make.