The Changing Shape of UK Manufacturing
Joe Grice, Director and Chief Economist
Outline
• Why is productivity important?
• Manufacturing output, employment and productivity
• Potential reasons the increase in manufacturing productivity:
• A better quality workforce
• An improvement in the information technology base
• A change in the composition of the UK manufacturing industry
• Investment in research and development
• Capital deepening
• A more integrated global economy
• Productivity growth by export status
• Productivity growth by firm ownership
Current price Gross Value Added per hour
and hourly wage
Source: Labour Productivity Measures from the ABS
Labour productivity (output per hour) 19482013, (1948=100)
Source: Labour Productivity (ONS)
Whole economy and manufacturing output
and workforce jobs
Source: Index of Production (ONS), Gross Domestic
Product (ONS) & Labour Market Statistics (ONS)
PRODCOM sales growth, (average annual growth,
2002-2013, %)
Source: UK Manufacturers’ Sales by Product(PRODCOM)
:
Reduction in manufacturing jobs between
1979 and 2013 (%)
Source: Labour Productivity Statistics (ONS)
:
Contributions to change in Gross
Value Added, 1994-2012
Source: Multi-factor Productivity (ONS)
:
Labour quality by industry (1993=100)
Source: Quality Adjusted Labour Input (QALI) :
Percentage of manufacturing hours
accounted for by qualification
Source: Quality Adjusted Labour Input (QALI)
Percentage of manufacturing hours
accounted for by age
Source: Quality Adjusted Labour Input (QALI)
Contribution to manufacturing subindustries productivity growth
Source: Labour Productivity (ONS) and Labour Market Statistics (LMS)
Average annual labour productivity growth
by ICT maturity
Source: Annual Respondents Database (ARD): Annual Business Survey
(ABS), E-commerce survey, and Community Innovation Survey (CIS)
Job flows out of the manufacturing
industry: 2002 to 2013
Source: Labour Force Survey Microdata
Net capital stock and output per hour
Source: Capital Stock and Labour Productivity
Research and development expenditure
as a proportion of turnover, %
Manufacturing
Services
Food products and beverages; Tobacco products
Textiles, clothing and leather products
Pulp, paper and paper products; Printing; Wood and straw
products
Refined petroleum products and coke oven products
Chemicals and chemical products
Pharmaceuticals
Rubber and plastics
Other non-metallic mineral products
Casting of iron and steel
Non-ferrous metals
Fabricated metal products except machinery and equipment
Machinery and equipment
Computers and peripheral equipment
Electrical equipment
Consumer electronics and communication equipment
Precision instruments and optical products; photographic
equipment
Motor vehicles and parts
Other transport equipment
Shipbuilding
Aerospace
Other manufactured goods
2010
3.3
0.2
0.4
0.1
2011
3.6
0.2
0.5
0.1
2012
3.4
0.1
0.5
0.1
0.1
6
3
31.7
0.6
0.6
1.3
1.8
0.4
2.9
9.2
4.2
11.6
0.1
5.7
2.2
35.5
0.7
0.6
1.6
1.4
0.5
3.2
9.9
3.9
17.3
0.1
7.6
2.6
33.8
0.8
0.4
1.7
1.1
0.5
3.3
10.1
3.7
27.6
4.7
3.4
1.1
4.6
8
0.9
5.4
4
1.1
5.6
7.7
0.9
5.6
4.4
1.1
4.7
7.5
0.9
Source: UK Business R&D Publication (ONS)
Average annual labour productivity growth
by exporting status (% per annum, 2001 to 2010)
Annual Respondents Database (ARD): Annual Business Survey (ABS),
E-commerce survey, and Community Innovation Survey (CIS)
Average annual labour productivity growth
by firm ownership, (% per annum, 2001 to 2010)
Annual Respondents Database (ARD): Annual Business Survey (ABS),
E-commerce survey, and Community Innovation Survey (CIS)
Conclusion
• Manufacturing productivity has risen across a broad
range
of
sub-industries,
from
textiles
to
pharmaceuticals. Due to steady output growth and a
noticeable fall in employment.
• A range of factors are having an impact – such as
labour quality and capital deepening. This
presentation has been designed to inform and
encourage the debate around manufacturing
productivity – not provide a comprehensive and
definitive explanation.