It’s one of those Willy Hutton things – French labour productivity is higher than UK, therefore Britain should do things more like France. Which is true of course, if labour productivity was the be all and end all of the thing we’d like to organise society to improve.
The thing is the comparison doesn’t work quite the way that Willy and the Hand Jivers think. If you fire the least productive workers then productivity will improve. For we count productivity only over the output and hours in of those in employment. We don’t include in our calculations those whose productivity is zero because they’re not working any hours.
We can even prove this with reference to the United States:
American workers’ productivity increased at its fastest pace in 11 years during the height of the coronavirus pandemic, trouncing predictions for a more muted rise.
Productivity, a measure of output per hour, rose by 7.3 per cent in the second quarter, reflecting the fact that hours worked fell at a greater rate than output, the US Labor Department said. The number of hours worked by Americans fell by 43 per cent between April and June, the largest decline since 1947, while output fell by 39 per cent. The jump in productivity caused the annual trend to rise to 2.2 per cent from a year ago.
Two effects going on here. When you fire people you fire the marginal employee – the one with the lower productivity. Secondly, the parts of the economy most hit with the lockdown were the low productivity ends of the services sector – restaurants and so on and on.
Which brings us back to the French example. It’s easy to raise worker productivity by firing the least productive workers. The flip side of this is that you end up with a hardcore of long term unemployment of those least productive workers. As, you know, sensible economists have been pointing out for decades now.
And, yes, French long term unemployment is higher than American – that’s why French productivity is higher.