Labour productivity is a key indicator of economic wellbeing, and raising it – producing more goods and services from the same or less work (labour input) – is one of the main drivers of sustainable economic growth.
Historically, comparisons of productivity across countries have shown substantial gaps, even between similar-sized economies at a similar stage of development – leaving many analysts struggling to understand the causes. However, a new OECD study has found that at least a part of these gaps disappears once we adjust for differences in how countries measure labour input.
In the case of the United Kingdom for instance, the study reveals that the gap in labour productivity levels with the United States, is around 8 percentage points smaller than was previously thought – closing from 24% to 16%. The gap with Germany shrinks from 22% to 14% and with France from 20% to 11%.