Labour Productivity Statistics 2022

This is the latest release

An Official Statistics Publication for Scotland

Published on 26 July 2023

Overview

This publication includes estimates of labour productivity for Scotland’s onshore economy up to 2022.

  • In 2022 annual output per hour worked increased by 2.0% compared to 2021, after falling by 0.8% in 2021 and by 1.6% in 2020. Annual output per hour worked in 2022 is 0.4% below the pre-pandemic level in 2019.

  • In 2022, the annual productivity growth of 2.0% can be broken down into GDP growth of 4.9% offset by a 2.9% increase in total hours worked, as economic activity continued to recover from the large drop in 2020 during the coronavirus pandemic.

  • The alternative measure of productivity, output per job, increased by 2.2% in 2022, after increasing by 9.3% in 2021 and falling by 12.2% in 2020. The much larger movements in output per job over recent years reflect the changes in average weekly hours during periods when workers were furloughed and economic activity was restricted.

  • Over the longer term since the financial crisis, between 2008 and 2022, productivity in Scotland has increased by an average of 1.0% per year. This compares to average annual productivity growth of 0.9% for the OECD as a whole, 0.9% for the EU 27 as a whole, and 0.5% per year for the UK as a whole.

What’s included in this release?

Labour productivity measures the amount of economic output, defined as gross value added (GVA) that is produced, on average, by each unit of labour input, and is an important indicator of economic performance.

This publication contains a brief summary of the key results from the latest productivity statistics, focussing in on the headline measures of change in output per hour worked.

The key results are presented in real terms, i.e. where the effect of price changes has been removed to allow for meaningful comparisons over time. Estimates are for Scotland’s onshore economy.

This release also presents analysis which helps to break down the growth in productivity based on changes within industries and the labour force.

Data

Full results including estimates of output per job, current price productivity measures (not adjusted for price changes) and experimental estimates of labour productivity by industry are available in the downloadable tables.

Annual Results

Output per hour worked

Annual labour productivity, output per hours worked 1998-2022

In 2022, annual labour productivity as measured by output per hour worked increased by 2.0% compared to 2020. This follows a decrease of 0.8% in 2021 and a decrease of 1.6% in 2020 during the coranivirus pandemic. Annual output per hour worked is 0.4% below pre-pandemic levels in 2019.

In 2022, the productivity growth of 2.0% can be broken down into GDP growth of 4.9% offset by a 2.9% increase in total hours worked, as economic activity continued to recover from the large drop in 2020.

Output per jobs

Annual labour productivity, output per job, 1998-2022

Output per job, increased by 2.2% in 2022, after increasing by 9.3% in 2021 and falling by 12.2% in 2020. The much larger movements in output per job over recent years reflect the changes in average weekly hours during periods when workers were furloughed and economic activity was restricted. ## {-}

Industry breakdowns

Changes in overall labour productivity can be due to a combination of different factors, including direct productivity improvements (like for like changes) within industries, the allocation (or reallocation) effect of changes to the structure of the economy and labour market, or a combination of both. These effects can be broken down and analysed using the ‘Generalised Exactly Additive Decomposition’ (GEAD) methodology.

Industry contributions to total productivity growth between 2019 and 2022 (Percentage point contributions to total cumulative change)

The graph above shows the cumulative change in productivity between 2019 and 2022 for each broad industry group, alongside their contributions to total growth in percentage points.

At the whole economy level, there was a 0.4% decrease in productivity over the last two years, this is solely driven by reallocation effect between industries, with no overall contribution from direct productivity improvements within the industries . Broadly speaking, this indicates that changes in the relative size of industries and their shares of the labour market acted to decrease productivity during this period.

Between 2019 and 2022, government services (public administration, education and health) made the largest positive contribution to total productivity growth. This is driven by a large positive allocation effect, reflecting in part the increased levels of employments within the public sector during the pandemic.

There were strong negative industry contributions from manufacturing, business services & finance and other services sectors. The decreases in manufacturing and other services were primarily due to a decreases in the direct productivity within the industries. The negative contribution from the business services & finance sector was mostly due to a negative reallocation effect.

About Labour Productivity Statistics

Labour productivity measures the amount of economic output that is produced, on average, by each unit of labour input, and is an important indicator of economic performance.

Output is defined as gross value added (GVA). For some international comparisons using data from the OECD, gross domestic product (GDP) is used instead, which is equal to total GVA plus product taxes.

Labour input is measured in terms of the number of jobs in the economy (giving a measure of output per job), and also the total number of hours worked (giving a measure of output per hour worked). Output per hour worked is usually viewed as the most comprehensive indicator of labour productivity and is thus taken as the headline measure.

Labour productivity statistics presented in volume or real terms (where the effects of price changes have been removed) are used to analyse changes in the level of activity over time within a particular country or industry, or to compare growth rates between countries or industries on a consistent basis. Results are indexed to a reference year, set at 2019=100 in this release for consistency with the GDP statistics published by the Scottish Government.

Results presented in nominal terms or current prices (not adjusted for the effects of price changes) are used to make comparisons of the relative level (not growth rate) between countries or industries at a particular point in time.

‘Generalised Exactly Additive Decomposition’ (GEAD) methodology is outlined in “Tang J and Wang W (2004), ‘Sources of aggregate labour productivity growth in Canada and the United States’, Journal of Economics, Volume 37, Number 2.” and is consistent with methods used by ONS.

Further information on the production and interpretation of these statistics is available here.

An Official Statistics publication for Scotland

These statistics have not been assessed by the Office for Statistics Regulation and have therefore not yet been designated as National Statistics.

Official and National Statistics are produced to high professional standards set out in the Code of Practice for Statistics. Both undergo regular quality assurance reviews to ensure that they meet customer needs and are produced free from any political interference.

Correspondence and enquiries

For enquiries about this publication, please contact:

or

The Scottish Government
National Accounts Unit
Office of the Chief Economic Adviser – Economic Analysis
St Andrew’s House (4WR)
Regent Road
Edinburgh
EH1 3DG

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