UK PRODUCTIVITY CHALLENGE

MANUFACTURING PRODUCTIVITY LEVELS VARY BY INDUSTRY 2012 2013 2014 2015

Annual percentage changes in gross value added per hour worked a key measure of labour productivity

90

85.8
83.6
80

80.1
77.3
Output per
70
hour declined
in seven of the ten
manufacturing
60
industries
in 2015
50

40

40.7

40.7
40.4
38.2
35.5
35.2

34.2
34.2

33.9

33.7
33.8
30

33

32.7
32.6
32
30.1

29.9

29.8
29.5
29.2

29
28.6

28.4
28.3

28.2

27.9

27.8
27.2

26.9
26.9

26.3
25.8
25.4
25

25.1
24.6

20

10

0
FOOD, TEXTILES, WOOD/PAPER CHEMICALS, RUBBER, BASIC METALS COMPUTER PRODUCTS MACHINERY TRANSPORT COKE AND REFINED
BEVERAGES APPAREL AND PRODUCTS PHARMACEUTICALS PLASTICS AND AND METAL AND ELECTRICAL AND EQUIPMENT EQUIPMENT PETROLEUM, OTHER
AND TOBACCO LEATHER AND PRINTING NON-METALLIC PRODUCTS EQUIPMENT MANUFACTURING
MINERALS

MANUFACTURING OUTPUT
Annual percentage change in quarterly output per hour

10

-5

-10

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Office for National Statistics 2016

FACTORS THAT MAKE THE BIGGEST DIFFERENCE TO PRODUCTIVITY G7 LABOUR PRODUCTIVITY

Survey of UK manufacturers Percentage difference with the UK in current price GDP per hour worked

0% 5% 10% 15% 20% 25% 30% 35% 40% 40 Canada Japan Productivity gap
France Italy between the G7
Investing in equipment, G7 exc. UK UK and the UK
technology, research 30 Germany US
and facilities

20
Creating demand for
products and opening new
sales channels 10

Optimising supply 0
chains and processes

-10
Skills training for
the workforce and
management -20

-30
Activities beyond
the factory floor
00

04

08
06
02

10
90

14
94

98
96

12
92

20

20
20
20

20

20
20
20
19

19

19
19
19

Source: EEF 2016 Source: Office for National Statistics 2016

MOST PRODUCTIVE COUNTRIES IN THE WORLD

Productivity* Hours Productivity* Hours Productivity* Hours Productivity* Hours

worked worked worked worked

UNITED
1 LUXEMBOURG 45.71 1,643 6 GERMANY 25.95 1,371 11 AUSTRIA 22.03 1,629 16 KINGDOM 18.64 1,677

2 NORWAY 36.36 1,427 7 DENMARK 24.14 1,436 12 FRANCE 21.21 1,473 17 JAPAN 16.72 1,729

UNITED
3 AUSTRALIA 29.81 1,664 8 STATES
23.66 1,789 13 CANADA 20.30 1,704 18 SPAIN 15.63 1,689

4 SWITZERLAND 28.35 1,568 9 IRELAND 23.12 1,821 14 FINLAND 18.95 1,645 19 ITALY 15.62 1,734

NEW
5 NETHERLANDS 28.35 1,425 10 SWEDEN 22.58 1,609 15 ICELAND 18.76 1,864 20 ZEALAND 15.58 1,762

*Productivity is defined as GDP per capita divided by hours worked

Source: Expert Market 2016