Higher productivity in Germany has nothing to do with population growth

Les Reid asserts in his letter “Too many people” (The Scotsman, 9 February) that the productivity of an economy is a measure based on the size of the population by arguing that the UK’S productivity has gone down because the population has increased by five million, whereas Germany’s productivity is high because its population has not increased since 2001.

That is after he actually commences with stating “Productivity is measured in terms of economic output per capita of population”. That introductory part of his letter is correct, but not what follows. It is widely recognised that the way to measure a country’s productivity in relation to its competitors is by identifying the value added as a proportion of GDP per person per hour worked. Figures for all important countries are provided by OECD from 1970.

Since Les Reid specifically mentions 2001, the OECD figures (GDP per person per hour worked) for Germany are 2001 US$52.00 and in 2015 $59.10 or an increase of 13.65 per cent.

The figures for UK for comparison are 2001 $42.10 and for 2015 $48.10 or an increase of 14.25 per cent. So the UK has increased productivity by a slight margin over Germany from 2001 until the last figures available in 2015, but Germany’s individual workers are still 22 per cent more productive than in the UK.

The higher productivity in Germany has nothing to do with population growth or stagnation, but simply with the higher value each German produces compared with workers in this country.

This is due to factors such as higher value products, higher throughputs, more efficient equipment, innovation and investment in general in productive equipment and type of education and training.

JOHN PETER Monks Road, Airdrie

Les Reid suggests that Germany has higher productivity than the UK because, unlike the UK, its population has not increased since 2001. Does he imply that immigration must be bad? Is that what he really wants to say, notwithstanding our low birth rate and ageing populace?

His view is novel. He has avoided other reasons. How about business and government investment levels? He quotes the ONS for his figures, but the ONS does not use them for his purpose. It has other reports on the subject. Early in 2017 the ONS reported that the UK’S productivity level showed the biggest gap with other leading western economies since modern records began in the early 1990s.

In November last year the ONS produced another report which showed that, over the last 20 years since 1997, the UK has had the lowest gross fixed capital formation as a per cent of GDP of all 34 countries listed – 23 in the EU. That has to be one major reason. If so, who/ what is failing?

Germany, for example, has a banking system which is seen as more business friendly than ours.

The City of London certainly does not have UK business as its primary focus. The background to the UK’S poor productivity is surely multi-factorial, but not including our population increase as a material factor.

Surely more youth is vital to economic growth.

DUNCAN CLARK Western Harbour Place,

Edinburgh