A Look at Differences in Productivity throughout the UK
The concept of productivity in an economic context is one of the most critical dimensions to examine when studying the business cycle of any country. It remains one of the major influencing factors, affecting recoveries and downturns of economies. One intuitively suspects that as education, infrastructure, equipment, materials, tools, training, methods and other factors of production improve, so would labour productivity, the amount produced per worker per hour. This is more or less the case in the UK.
The Office for National Statistics claims that the centre of London is the most productive region in the UK. This is no surprise considering that this is where highly paid bankers, accountants, lawyers and multi-million firms assemble to engage in transactions of a volume and value far superior to any other city in the UK. At the other end of the continuum is Cornwall, producing 28% less every hour than the national average, as opposed to London, where workers produce 42% more every hour than the national average. This is a typical gap between a major financial capital in the world, and a remote and rural coastal region, however there are exceptions. North East Scotland doesn’t fail to impress, in fact, its productivity is very good considering its remote location. This is largely explained by the North Sea oil reserves and related industries based there, such as state of the art oil companies and cutting edge engineering firms. Other regions that are not classified as remote are still alarmingly unproductive, for example Staffordshire, West Wales and Lancashire.
More rural areas have long been dependent on sectors which struggle to improve efficiency over time, such as agriculture and tourism, contrary to other, more modern sectors, such as oil distillation and banking, where a new drilling rig or computer system can make a large difference in productivity levels.
It is not surprising when looking at many of the regions that have performed lower than average, in terms of productivity, as they are regions that have been reliant on industries, such as manufacture, that have been in long-term decline. This has led to the displacement of skilled jobs, towards more urban and thriving areas. This same shift has also, unfortunately, left behind communities that are in deep need of new and growing firms that are willing to build up the skills of workers and improve the prospects for the families in surrounding towns.
Another factor that is linked to high productivity in London and Aberdeen is the benefits foreign firms bring when they invest here. Sceptics can have a look at the benefits Swindon and Derby are enjoying, as the former is home of Honda’s functions in the UK, and the latter is where Toyota (as well as Rolls Royce) are based. This furthers the case to increase worldwide trade and promote the UK as a country of hard working skilled workers that welcomes dynamic business.
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