Monday, March 26, 2018

UK Pay and Productivity

According to the thinktank Localis, there has been a breakdown in the relationship between rising levels of worker productivity – a key measure of economic output per hour of work – and increases in pay and feelings of self-worth among employees. The report found that workers in large parts of the country are failing to benefit from improvements in the economy. This could cast doubt on a central plank of the government’s strategy for boosting workers’ pay by increasing productivity. Many areas analysed in the report were found to have upped their productivity rates yet had seen relatively weak, sometimes negative, growth in wages. In one example, Dartford, on the edges of London, has seen economic output per head increase by close to 30% between 2010 and 2015, yet median wage growth was less than 3% over the same period. The five worst areas for wage growth relative to productivity in England over the last five years were Hounslow and Camden in London, as well as Mendip in Somerset, Rushmoor in Hampshire and Three Rivers in Hertfordshire.

Leave-voting areas appear to have been short-changed the most.  Some areas, including Lancashire, Cumbria and the south east midlands, have seen falling rates of pay and worker satisfaction over the last five years, despite rising levels of economic output. Almost six in 10 people in Lancashire voted to leave the EU in the 2016 referendum. In Cumbria, 56% voted to leave and in the south east midlands 55%. 

For places getting left behind economically in the last five years, the report found pay and worker satisfaction had slipped from the national average and warned that without significant intervention from central and local government, there is a risk these places will slide further away from the rest of the country.

Jack Airey, head of research at Localis, a cross-party not-for-profit thinktank, said: "We’re basically asking people to work harder, but for what?”

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