Production, Productivity and Employment

The solution to unemployment is often seen as lying in renewed economic growth leading to industrial expansion. The Index of Production (IOP) gives a measure of total industrial output for which the associated number of employees is also available. Productivity may then be defined as production per employee and an index generated by dividing the IOP by the number of employees. Increases of both production and productivity are seen as implicit in economic growth and high, medium and low growth trends may be extrapolated for both. This allows nine combinations of Production and Productivity to be modelled for their impact on employment. A comparison of these models with the number of employees in industry over the period 1959–82 shows that the behaviour can be explained by the rate of growth of production being less than that of productivity. The analysis is extended to include the aggregate of annual working time and, hence, hourly productivity from which it is concluded that even renewed growth of production at 3.5 per cent per annum would be accompanied by further job loss over the rest of the 1980’s.