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Last month the Office for National Statistics said that over the
past 10 years productivity growth appeared to have been the
slowest since the early 1820s, when Britain was emerging from
the Napoleonic wars.
The exact cause of this slowdown is unclear. In part it reflects
a longer-term slowdown in productivity growth that began before
the financial crisis, as well as low investment afterwards, a
lasting hit to financial-services profits and falling North Sea
oil output.
Looking at more finely grained data on individual types of
business than was available before, the ONS said changes in the
shape of Britain's economy played a bigger role than declining
productivity within individual industries.
"Just over two thirds of the fall in productivity growth over
this time can be attributed to the shifting composition of the
UK economy, with the remaining one-third being attributable to
changes in growth for particular industries," it said.
Reduced labor mobility since the financial crisis has been an
important reason for this. In the five years before the
financial crisis, people changing jobs to work in more
productive industries added about 1 to 2 percentage points to
cumulative productive growth of 8 to 12 percent, the ONS said.
By contrast, since 2010 this effect has gone into reverse while
overall productivity has barely grown, reflecting a reluctance
of people to change jobs after the financial crisis.
Also weighing on the average productivity of the economy as a
whole was a reduction in the size of sectors like financial
services - where productivity is still above average - compared
with less productive activities such as security, landscaping
and recreational activities.
(Reporting by David Milliken, editing by Larry King)
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