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NIESR General Election Briefing: ‘Regional Inequality in Productivity in the UK: A Closer Look’

Productivity in London is 72% higher than the national average, and is twice as high as in seven of the eleven other regions. But when measuring Gross Added Value (GVA) per employed worker rather than per inhabitant, productivity in London is only 37% higher than the national average, a new Briefing by the National Institute yesterday highlighted.

The briefing also outlines that:

  • The difference between GVA per head and per worker comes from workers commuting and from some regions having a larger share of employed working age people than others.
  • There is also a substantial amount of inequality within regions. Every UK region except for Wales and the North East of England has at least one local area with productivity above the national average. For example, Belfast has GVA per head that is 38% higher than the UK average, and which is 2.4 times as large as the lowest productivity local area in Northern Ireland (North of Northern Ireland).
  • Breaking down regional productivity into wages and profits, we find that wages (measured as employee compensation per employee) are more evenly distributed across regions than profits. 
  • Regional differences in GVA per employed worker have remained roughly steady since 2005.
  • Since 2010, regional wage inequality (measured as employee compensation per employee) has been decreasing somewhat. It is nominal wages at workplaces in London which have been stagnating, while wages outside of London have shown modest growth in nominal terms. 
  • In contrast, the distribution of profits across UK regions has become more unequal. This is mainly due to rising regional inequality in rental incomes, driven by higher rates of rental income growth in London than in other regions.

The author of the briefing, NIESR Associate Research Director Monique Ebell concluded:

“The evidence we present does not support the narrative of rising regional inequality in productivity over the past decade. Breaking down regional productivity into wages (employee compensation per worker) and profits, we find that wages have even become somewhat more equally distributed across UK regions, with wages at workplaces in London stagnating, while wages outside of London have shown modest growth in nominal terms.”

Notes for editors:

The full briefing, “Regional Inequality in Productivity in the UK: A Closer Look” is available on NIESR’s special General Election page.

For more information or to arrange an interview with the author of this briefing please contact NIESR Press Office: Luca Pieri on 020 7654 1931 / l.pieri@niesr.ac.uk  / press@niesr.ac.uk 

The briefing was part of a series made possible thanks to funding by the Nuffield Foundation to ensure public debate in the run-up to the General Election is informed by independent and rigorous evidence.

NIESR aims to promote, through quantitative and qualitative research, a deeper understanding of the interaction of economic and social forces that affect people's lives, and the ways in which policies can improve them.

Further details of NIESR’s activities can be seen on http://www.niesr.ac.uk  or by contacting enquiries@niesr.ac.uk . Switchboard Telephone Number: +44 (0) 207 222 7665

 

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