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Why is the UK's productivity so low? Watch

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    Why is the UK's productivity so low? Any ideas would be appreciated! Have to write this as an exam-style response but any help would be useful.
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    (Original post by student27839)
    Why is the UK's productivity so low? Any ideas would be appreciated! Have to write this as an exam-style response but any help would be useful.
    Lack of natural resources
    Labour is expensive in the Uk.
    It is cheaper to produce in Low income countries where costs are cheaper.
    The UK has many regulations in place by government which makes production processes more expensive.
    The market in the UK isn't growing much anymore, not compared to markets such as Asia.

    Hope this helps
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    (Original post by Roberto12)
    Lack of natural resources
    Labour is expensive in the Uk.
    It is cheaper to produce in Low income countries where costs are cheaper.
    The UK has many regulations in place by government which makes production processes more expensive.
    The market in the UK isn't growing much anymore, not compared to markets such as Asia.

    Hope this helps
    These do not necessarily result in low productivity. For example, labour may be more expensive because they can produce more of a given product in the same amount of time. If anything the UK is more well known as a country with a much more flexible workforce vs France, Germany etc. where regulations regarding worker's rights (right to strike etc.) can encourage companies to invest more into capital of greater efficiency than workers.
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    (Original post by student27839)
    Why is the UK's productivity so low? Any ideas would be appreciated! Have to write this as an exam-style response but any help would be useful.
    We have some of the longest working hours among European countries. This can mean that output per worker per hour is less than it otherwise may be - workers are less productive (diminishing marginal returns).

    Also, a lack of investment in key education sectors such as engineering.

    In the short term, a lack of investment resulting from poor confidence can cause declining worker productivity over time.

    There are non-economic explanations also. The 'friday work ethic' is something to consider when comparing labour productivity
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    Too much regulation that stop productivity driven change in a company
    High tax rates may inhibit profit accumulation which maybe/ could be spent on capital expenditure by business
    Government may not of made up the short fall in capital expenditure that the private sector is not spending (increasing output gap)
    There is a predicted 1-2% gap in the calculations produced by the ONS with respect to productivity according to the BOE
    Low interest rate environment may unnecessarily be encouraging zombie companies to survive thus shifting investments away from dove companies
    QE distorted the market thus investors are unable to distinguish between failing and thriving companies in the environment
    Lack of resources in the country
    To the contrary of another individual on this forum, a above equilibrium wage rate encourages productivity and a flexible labour market makes it cheaper to hire and fire workers than to train them
    Too many lost working days by stressed employees with health problems
    Lack long run productivity driving expenditure such as education
    80% of British business are SME's and alot of them tend to be family run. This encourages nepotism which in aggregate reduces productivity
    A higher wage/ bonus may encourage employees to work harder, more productively or smarter to achieve to exceed targets and it may not be used in the UK as an incentive widely to make any substantial difference.
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    British workers are generally obese and glued to their smartphones ? they are not nimble and task-oriented like the Chinese etc.
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    We're quite a individualistic and indulgent society. Meaning that we like to focus on our own individual achievement as opposed to our team. (Which I assume affects overall productivity if we're just trying to focus on ourselves only). We are indulgent, as we value free time and focus on enjoying ourselves, we see it as important. Hence we demand and expect more free time and reasonable working hours.

    On the flip side, China scores high on collectivism. Meaning they value a common goal over a personal goal. (i.e. Company success valued over their promotion). They are less indulgent (although this is changing), meaning they care less and don't demand so much free time and perks as we do.

    For example, a free gym pass provided with your job would be valued more by a British worker, than it would by a Chinese worker.

    https://geert-hofstede.com/united-kingdom.html This is a analysis of the UK and China's culture used mainly for international HR, but you may find it useful.
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    (Original post by Lord Samosa)
    We're quite a individualistic and indulgent society. Meaning that we like to focus on our own individual achievement as opposed to our team. (Which I assume affects overall productivity if we're just trying to focus on ourselves only). We are indulgent, as we value free time and focus on enjoying ourselves, we see it as important. Hence we demand and expect more free time and reasonable working hours.

    On the flip side, China scores high on collectivism. Meaning they value a common goal over a personal goal. (i.e. Company success valued over their promotion). They are less indulgent (although this is changing), meaning they care less and don't demand so much free time and perks as we do.

    For example, a free gym pass provided with your job would be valued more by a British worker, than it would by a Chinese worker.

    https://geert-hofstede.com/united-kingdom.html This is a analysis of the UK and China's culture used mainly for international HR, but you may find it useful.
    I'm not sure I agree with the China collectivism/Confucious argument.

    I'd argue that promoting self interest results in greater productivity gains than communist ideals of a collective workforce. The Chinese are actually less labour productive than those in the UK.

    Just having a large workforce and working for a common interest does not necessarily improve labour productivity.
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    (Original post by harryleavey)
    I'm not sure I agree with the China collectivism/Confucious argument.

    I'd argue that promoting self interest results in greater productivity gains than communist ideals of a collective workforce. The Chinese are actually less labour productive than those in the UK.

    Just having a large workforce and working for a common interest does not necessarily improve labour productivity.
    You're correct. Collectivism also means that you're more "loyal" to your current group, and so collaborative work with other groups suffers as a result.

    There's up and downs of either types of cultures, we naturally will prefer and view the British way of things as better.

    I got my conclusion about China's collectivism from Hofstede's research (see link in my original post). But yeah, their culture is changing fast.
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    (Original post by Lord Samosa)
    You're correct. Collectivism also means that you're more "loyal" to your current group, and so collaborative work with other groups suffers as a result.

    There's up and downs of either types of cultures, we naturally will prefer and view the British way of things as better.

    I got my conclusion about China's collectivism from Hofstede's research (see link in my original post). But yeah, their culture is changing fast.
    You do know that culture is marginal for productivity of workers. I understand the total productivity factor argument where optimal utillisation of tools lead to higher out put in proportion to capital. But once again, it is only marginal.
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    (Original post by The Asian Tory)
    You do know that culture is marginal for productivity of workers. I understand the total productivity factor argument where optimal utillisation of tools lead to higher out put in proportion to capital. But once again, it is only marginal.
    To clarify, do you mean that culture has little effect on the productivity of workers? I'm curious as to the evidence you have for this.
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    (Original post by The Financier)
    To clarify, do you mean that culture has little effect on the productivity of workers? I'm curious as to the evidence you have for this.
    The first link: https://www.google.co.uk/search?q=mi...hrome&ie=UTF-8
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    I don't think that study works the way you've interpreted it as doing. Bath are looking at worker absence rates of Central European migrants as a proxy for work ethic whereas a discussion on productivity looks at the amount of output for a given amount of a 'resource' like time. This quirk means you cannot establish their consideration of work ethic as a substitution for productivity since by definition someone who is absent from work does not produce anything in the first place.

    There's also the consideration that the lifetime work ethic of a migrant and the work ethic of their national culture of origin aren't likely to be the same. It seems intuitive that in the latter, culture is more sticky (that is, has greater impact and persistence) given it's prevalence amongst a worker's peers. Someone who has moved country on the other hand faces a different dominant mentality from their new peers which often necessitates adaptation to it rather than the other way around.
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    (Original post by The Financier)
    I don't think that study works the way you've interpreted it as doing. Bath are looking at work absence rates of Central European migrants as a proxy for work ethic whereas a discussion on productivity looks at the amount of output for a given amount of a 'resource' like time. This quirk means you cannot establish their consideration of work ethic as a substitution for productivity since by definition someone who is absent from work does not produce anything in the first place.
    Well my argument was about the relationship between productivity and ethnic minorities. The relationship between higher productivity and migrant labour tends to break down in the long run as migrant labour readjusts to British norms in labour. "In
    short, if a longer residency in the UK improves the employment outcomes of migrants, then these migrants will no longer have an incentive to signal productivity through behaviours associated with a stronger work ethic.""As
    this labour market assimilation process occurs, migrants will no longer have an incentive to signal productivity through additional effort, therefore their reliance on signalling through, for example, lower absence, will lessen."
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    There are lots of factors that affect productivity, such as the ratio of capital to labour, regulations, technological advances, culture, income inequality and the level of specialisation.
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    (Original post by The Asian Tory)
    Well my argument was about the relationship between productivity and ethnic minorities. The relationship between higher productivity and migrant labour tends to break down in the long run as migrant labour readjusts to British norms in labour. "In
    short, if a longer residency in the UK improves the employment outcomes of migrants, then these migrants will no longer have an incentive to signal productivity through behaviours associated with a stronger work ethic.""As
    this labour market assimilation process occurs, migrants will no longer have an incentive to signal productivity through additional effort, therefore their reliance on signalling through, for example, lower absence, will lessen."
    Asides from the additional stuff I added to my initial post, let me just note that you state yourself that an adjustment to the cultural norms of their new host country occurs. Such assimilation makes migrant behaviour a poor proxy for the national culture of their country of origin.

    Further, to state once again, I don't accept their definition of work ethic as directly equatable to a discussion on productivity. The actual paper discusses the use of work ethic by migrants as a signalling tactic for productivity rather than a direct substitution and accepts that migrants have diminishing incentives to signal productivity through work ethic if longer residencies improve their employment outcomes. Neither allows for a direct comparison of national cultures and their impact on productivity.
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    (Original post by student27839)
    Why is the UK's productivity so low? Any ideas would be appreciated! Have to write this as an exam-style response but any help would be useful.
    You might want to look into commuting times (the UK's have increased in the past decade, and are amongst the highest in Europe), which have two impacts on productivity.

    The first negative impact is worker tiredness - coming to work tired, wanting to get back home at a meaningful hour, and thus being unwilling to stay at the office belong the times which are absolutely necessary, and so on. In addition, the document management policies of some firms tend to prohibit people from accessing documents outside work, which, in turn, reduces the amount of meaningful stuff you can do during the commute itself. That means that you have a lot of 'dead' time in the day - time during which you're still taking up energy (as opposed to resting or sleeping), and yet doing nothing towards your work or home life.

    However, longer commuting does help productivity in other ways. It helps alleviate structural un- / under-employment, particularly for highly-trained staff that are tied to a less prosperous region or one without job opportunities that match their skills. It also gives individuals the ability to do serious, quiet work on the morning train, which they couldn't necessarily do in today's (idiotic) 'open' workspaces, which are noisy and full of distractions from colleagues. I believe that something about this was mentioned in the HS2 consultation.
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    (Original post by The Financier)
    Asides from the additional stuff I added to my initial post, let me just note that you state yourself that an adjustment to the cultural norms of their new host country occurs. Such assimilation makes migrant behaviour a poor proxy for the national culture of their country of origin.

    Further, to state once again, I don't accept their definition of work ethic as directly equatable to a discussion on productivity. The actual paper discusses the use of work ethic by migrants as a signalling tactic for productivity rather than a direct substitution and accepts that migrants have diminishing incentives to signal productivity through work ethic if longer residencies improve their employment outcomes. Neither allows for a direct comparison of national cultures and their impact on productivity.
    To each their own I guess. Though I must reinforce that I do not reject the proposition that culture may have effect on work ethic thus their productivity potential, as I believe that it is only to the margin that culture have affects one's productivity potential. Rather I reject the notion that some cultures have complete or comparative advantage over others because it doesn't include factors such as their health care, homelessness, prosperity (quality of life/ upbringing), education, experiences and individual/unique characteristics. Must I add that excessive data mining and confirmation biases may sway data to meet one's conclusions.
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    R u kidding me? UK is one of THE most productive countries on earth, fifth largest economy and the 60 mil inhabitants still out produce indias 1.2 billion.
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    (Original post by crosssafley)
    R u kidding me? UK is one of THE most productive countries on earth, fifth largest economy and the 60 mil inhabitants still out produce indias 1.2 billion.
    In terms of productivity, we have the second lowest productivity rate of all OECD countries bar Japan. There is a correlation between the size of the economy and productivity capacity but it is not strong nor absolute. An example of this is the China v Germany comparison, where the average Germany employee is more productive (produces more or higher quality goods and service in output per hour worked) than the Chinese worker yet in aggregate, China has a larger economy. The statistical evidence is against you...
 
 
 
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