Saturday, April 19, 2014

Whose Productivity? Whose Wealth?

Liverpool economic productivity has shot up since 2004, but who's benefited?
This week, the Liverpool Echo gushed that the Liverpool city region was being "hailed for a remarkable rise in its productivity". It was referencing research published by Capital Economics, who claim that Liverpool's productivity growth of 34% since 2004 is the highest in the country. But is the average Liverpool area resident one third better off as a result, or are we simply being exploited more?

According to the figures, Inner West London scores highest with £43 output per person per hour in 2012. Canary Wharf is second with £37 per hour, Liverpool is far behind, on £27 per hour, four pounds ahead of North Manchester. But Liverpool's growth is the highest in the UK.

If the average Liverpool worker received the £27 pounds per hour of wealth they produce, this would amount to around £972 per week, or fifty thousand per year! Enough for a very comfortable lifestyle for all in employment, and their families. But in the last year for which figures were available, the average Liverpool wage was £23,000.

In other words, the average Liverpool worker receives around 45% of the wealth they produce. The rest - more than half - goes to their employer. In a way this should surprise no-one - it is the basic foundation of capitalism. But under conditions where the inflation-adjusted value of the average Liverpool wage has fallen by a few pounds per week in the time period covered by Capital Economics study, it would make more sense to report that the average Liverpool worker is about 35% more exploited than they were in 2004. Increasingly too, this newly-created wealth quickly leaves the city for richer areas, with multinationals dominating the Liverpool economy.

Averages conceal a lot of things. For instance, a fall of a few quid in the value of the average wage can not really be used to explain a recent fivefold increase in food bank usage for those at the very bottom. But maybe it can help us see why increasing productivity is not necessarily a good thing in of itself, especially when it has a cost in sweat and tears. And also, perhaps we can imagine how comfortable all our lives could be if working class people owned the fruits of their own labour.
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