Speaking at RSS Conference in Manchester this morning, Tily argued that it is a fallacy to interpret productivity outcomes as indicating a failure of supply. Instead, weak productivity may simply reflect weakening demand.
As argued in a TUC report published last year, “the poor productivity record, in the UK and across most advanced economies, has been caused by austerity sucking demand out of economies”. Whereas in previous recessions, weakening demand led to higher levels of employment, Tily argued that, in the aftermath of the financial crisis, it was wages that suffered, rather than employment – hence Osborne’s “employment miracle”: people are still in work, but earnings have decreased.
- Geoff Tily’s talk was titled ‘Productivity statistics and the economy’, in session 1.6 Contributed – Official Statistics: Productivity & Tax