Why does the UK have such low productivity compared other advanced economies?

[Fifi1010]

Our economic productivity has grown 0.8 percent per year on average since 2008 compared with 2 percent before. Why is that? High productivity increases the tax receipts , money for schools and healthcare. If we don't improve productivity living standards will further decline. Where have we gone wrong? I know Brexit is a problem but this started 8 years before.

And crap wages & high rents propped up tax payers

Plus lack of investment in tech & education

We also have wealth inequality

It's the lack of investment and vision.

Take for instance the house buying process. I don't think there is another western country where the process is so unsure and convoluted. A lot of time, money and energy goes into the conveyancing process, it just gets sucked in and produces nothing of value.

Healthcare. This is purely anecdotal. I have had the same cardiac investigations done in the UK and in the Netherlands.

In the UK: I had to take pretty much 3 days off work, just sat around the hospital awaiting different investigations, scheduled on different days, at inconvenient times.

In the Netherlands: got a phone call, scheduled an appointment convenient to me, went to the specialist. Had all my investigations done in one morning (ultrasound, ECG, blood test, basic measuring/weighing, appointment with the consultant), was outside back on my way to work within 2 hours. Got the results via the phone.

Now I bet the UK option is more efficient for the NHS, but in the overall picture the Netherlands wins.

We don't want our little darlings to get their hands dirty with manual work, trades, manufacturing, etc.! We'd far rather they went to Uni for 3 years to get a Mickey Mouse degree and then work in call centres, retail or hospitality on minimum wage!

A factor could be because there are far fewer manufacturing companies in the UK now and owners have moved plants abroad, removing jobs.

Also, several industries were closed down in the 1980s in the north

@CuteOrangeElephant

In the Netherlands: got a phone call, scheduled an appointment convenient to me, went to the specialist. Had all my investigations done in one morning (ultrasound, ECG, blood test, basic measuring/weighing, appointment with the consultant), was outside back on my way to work within 2 hours. Got the results via the phone.

So true. Inefficiency and a culture of not caring about waste, peoples' time, etc is endemic in the NHS and that causes lots of issues for workers, carers, etc.

When I first got hearing aids, it took 9 months, several appointments (starting with 3 appointments with the GP alone), one appointment in hospital A for a hearing test, another appointment in hospital B to see the consultant, another appointment in hospital C to have aids issued, then 2 more appointments for "tweaking" that apparently couldn't be done at the first issue! That was a lot of time off work, journeys, cost of parking, etc

When they needed replacement, I went private. Everything, literally everything done in one appointment, from checking the ears, through to hearing test, through to being handed the aids, and a very comprehensive "tweaking" to ensure they were set correctly when I left the room, all within an hour! There was an offer to go back for further "tweaking" but it wasn't necessary as she'd set them correctly!

We don't produce anything and most of our jobs aren't real jobs.

The UK is the ninth largest manufacturing nation in the World, so we're punching above our weight as we're not the 9th largest in terms of size, population, etc.

https://www.makeuk.org/insights/publications/uk-manufacturing-the-facts--2022#/

Most posts seem to mention lack of industry and produced items tbough.

But we're still 9th in the World in producing things though, i.e. manufacturing, which isn't bad at all considering the size of our relatively small country! We're clearly still doing something right!

One other issue is countries like the USA have a lot of raw materials and production and processing of those for export and domestic consumption gives and automatic productivity advantage over places like us. China continues to exploit their coal reserves to provide power - we shut down our coal industry despite having reserves remaining.

It turns out that an sick, stressed, unhappy and poorly educated workforce isn't actually very good at working effectively. Who would have known? 🤷‍♀️

completely agree. I would only add that creation of innovation and business is hampered by lack of security socially (housing, col, transport etc.) which deters people from taking risks with their employment and education.

Exactly this, the poster is absolutely bang on with this.

this basically.

In the UK It doesn't pay to work more, loose benefits, hit higher tax bands etc

Real lack of investment in technology and reliance on tax credits to top up wages .

Tax credits, as @sst1234 said in the first response. Get rid of them and companies will invest in automation rather than demanding we import more cheap labour which just adds to the pressure on infrastructure.

However, the glimmer of light on the horizon is that the UK has just joined an even larger free trade bloc than the EU: the CPTPP which represents over 16% of global GDP.

True, but low productivity is present for those of us working long hours for poor wages - it's a bigger problem than in work benefits.

You can't just abolish tax credits overnight - it would lead to massive social problems.

Going to have to pull you up on the house-buying part. We're in Germany and its much worse here. Usually additional fees (taxes, parasitic estate agents etc) make up 10-15% of the costs paid to own the property.

This does have certain benefits though: tenants, and especially long-term tenants have much stronger rights to not be evicted, and people tend to only buy one property and then live in it, typically at some point in their 30s or 40s rather than constantly trading up as per the UK.

Yep, so many "cliff edges" that discourage people working more hours, taking promotions, etc., due to tax hikes or benefit losses.

Like the £50k income threshold where you start to lose child benefit.

Or the £100k threshold where you lose free childcare and the tax free personal allowance.

Or the lower thresholds where you start to lose tax credits or UC, or council tax relief, etc.

ALL these cliff edge thresholds need reviewing so that people are guaranteed to keep most of the extra money they earn, i.e. have a maximum "Loss" of tax reliefs or benefits etc of 50%, so that for every extra pound you earn, at whatever income level, you're guaranteed to keep at least half, 50p of it after taking into account free childcare, child benefit, tax/nic rates, benefit clawbacks etc.

We really should never have allowed a situation where someone can lose 70p or 80p or even all of that extra pound they earn.

Going to have to pull you up on the house-buying part. We're in Germany and its much worse here. Usually additional fees (taxes, parasitic estate agents etc) make up 10-15% of the costs paid to own the property.

Is the process even slower? Or as slow? Estate agent fees are higher in Australia but they get the job done a lot quicker because the process is properly designed.

Of course you can't, but you can certainly announce a "road map" of them being tapered away or reduced over a 5-10-15 year period to give people and organisations a chance to make the changes required.

In fact, that's similar with the introduction of Universal Credit, where new claimants go straight onto UC, but existing TC claimants stay on the old system, with an option to move to UC, and ultimately, after several years, everyone on TC will move over to UC.

The sooner we start with these big things the better. Unfortunately, governments for the last 30 years have preferred to kick things into the long grass if changes can't be made within 3-5 years. Short term thinking will be the ruin of the UK due to this short-term-ism.

Poor education with a huge percentage of the population lacking basic numeracy; lack of technical skills in the workforce; poor healthcare so even working people work inefficiently and work when they're ill; low quality and unreliable childcare; and a crazy visa regime where it costs a fortune to bring smart people in so they go where the pay, weather, housing, healthcare and welcome are all better which had a knock on effect for business creation and investment.

As populations age, the UK is going to struggle to compete with the rest of the world for good people. It's a vicious circle.