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Dept of Trade and Industry

Answer

John Robertson: To ask the Secretary of State for Trade and Industry what estimate her Department has made of the changes in (a) labour and (b) multi-factor productivity in British industry in the course of (i) 2002-03 and (ii) 2003-04. [197473] Jacqui Smith: Productivity growth is essential for long-term economic growth and prosperity. The Government focuses on two main measures of labour productivity--output per worker and output per hour worked. On an output per worker basis labour productivity improved by 0.8 per cent. in the second quarter of 2003 compared with the same quarter in 2002, and by 2.9 per cent. in the second quarter of 2004 compared with the same quarter in 2003. On an output per hour basis it improved by 0.8 per cent. in the second quarter of 2003 compared with the same quarter in 2002, and by 3.5 per cent. in the second quarter of 2004 compared with the same quarter in 2003. The Government do not produce estimates of Multi Factor Productivity (MFP) growth. MFP--or as it is sometimes called Total Factor Productivity--is a measure of how the economy combines its inputs--such as labour and capital--to produce output. In practice MFP is calculated as a residual and is therefore subject to significant measurement error. For example MFP can be influenced by the mis-measurement of inputs, especially of the capital stock. Consequently, estimates of MFP are subject to substantial variation. Nevertheless, the Government do recognise the value of critically evaluating estimates of MFP when undertaking productivity analysis, and considers estimates produced by a range of bodies including the National Institute of Economic and Social Research, the University of Groningen and the US' National Bureau of Economic Research. This MFP data is used to provide contextual information to support the analysis of labour productivity growth.

Secondary information

Type

Written question

Reference

426 c1309W;426 c1313W; 197473

Session

2003-04

Subjects

Employment Industry Labour and employment Unemployment Productivity

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk