Observatory Home Economy Environment Planning Skills & Learning Public Health Culture Gloucestershire
Intelligence West Wilts & Swindon Somerset Dorset Devon Cornwall

PSA 1. Raise the productivity of the UK economy

Vision

Higher rates of productivity growth in the UK are essential to sustaining high and rising rates of economic growth, improving the standard of living of UK citizens and maintaining the UK's position as a dynamic, open and thriving economy.

There are two ways to achieve higher economic growth and higher standards of living. The first is to increase the overall amount of hours worked in the economy, either by increasing the number of people in employment, or by increasing the number of hours worked. The second is to raise overall productivity levels, increasing the amount produced for every hour worked.

The UK has experienced strong employment performance over recent years, but there is a limit to the number of workers the economy can supply and the number of hours that can be worked. This represents a constraint to the amount that labour can contribute to raising economic growth. Therefore, improving productivity is the primary route to improving long-term standards of living.

Measurement

There are a number of different measures of productivity, of which the most reliable and commonly used is labour productivity (whole economy output divided by the total number of workers in the economy or number of hours worked). This is currently the most robust, reliable and internationally comparable measure, and a good indicator of standards of living. For these reasons, this PSA will use labour productivity to measure and assess the UK's productivity performance.

Indicator 1 - Labour Productivity (output per hour worked) over the economic cycle.
Indicator 2 - International comparisons of labour productivity.