4.1 Poduction and productivity

Production

The proces of converting inputs, or the servies of factors of production into final output

productivity

output per unit of input

labour productivity

output per worker

capital productivity

output per unit of capital

Context UK productivity gap

Ranked 15th in the world by GDP per hour worked, Ireland is first.

but in the measure GDP per hour worked in the G7 countries UK falls behind USA, Germany and France

measures of labour productivity

GVA(gross value added) per hour worked

GDP per hour worked

problems with GDP/GVA per hour worked

• doesnt take into account informal economy

• doesnt account for the quality of the output produced

• high structural unemployment may skew the metric if only highly productive workers are unemployed

• May be hard to quantify the value of a piece of output eg the role of a manager