Development of the virus vaccine provides an answer to our productivity puzzle
Dreadful employment figures for the UK – down 220,000 – but apparently not as dreadful as expected? Unemployment still steady at only 3.9 per cent?
Actually the latest labour market numbers have an easy explanation but raise a really puzzling – and important – question about the future.
The explanation is simply that this is rear-view mirror stuff. Labour market data have always been lagging indicators, telling us what was happening a few weeks ago rather than what is happening now. But in a crisis such as this one, they are particularly misleading because of the government job support schemes. Unemployment will surge in the autumn and through the winter. We just don’t know by how much.
Now to the puzzle. During the past three months productivity as measured has plunged. Unemployment has remained low but output is running down by more than 10 per cent. Output is now starting to recover and will continue to do so, barring some second wave catastrophe. That will happen just as unemployment surges. So productivity will shoot up.
What we can’t know, and this is the puzzle, is how much of this surge will last. In other words, a couple of years from now when activity is back to normal – all right, a somewhat different normal – will we have learnt so many new ways of doing things that all those worries about technology failing to boost productivity disappear?
This is mostly because of the changes in the way we are communicating. Nearly all the technology we are using to do our work from home was around several years ago. For example Zoom goes back to 2011, but we didn’t use video-conferencing nearly so much. We have cut down on physical meetings; we are travelling much less for business; and for all the glitches associated with home-working, we have learnt to use technology much better.
The shock of Covid-19 has forced all of us to figure out how to apply technology to get jobs done faster and, let’s hope, better
This applies to other areas. Take distribution. It is more efficient of our time to pick goods online and have them delivered than it is to do the weekly run to the supermarket. It may well be more efficient in environmental terms too, though the data is unclear.
Or, most pertinently, take the development of vaccines. The University of Oxford and the pharmaceutical giant AstraZeneca have developed, tested and brought into production their vaccine with amazing speed. What would have taken five years has taken about five months. We should know in a few weeks’ time whether it works – fingers crossed. The Oxford team reckon they could clip a month or so off the timescale from what they have learnt. That is knowledge for the future: how to increase productivity in vaccine development by what was an unthinkable amount.
Of course we are not going to get ten-fold increases in the speed at which we can do things in most activity. There will be some aspects of the economy where everything will become more cumbersome. I expect air travel will be a higher-cost, less efficient operation for several years to come. But in most activities the shock of Covid-19 has forced all of us to figure out how to apply technology to get jobs done faster and, let’s hope, better.
What we can’t know is how much of what we seem to have learnt is really an advance and whether the new ways of working are sustainable. It is much more efficient to have a virtual consultation with a GP than it is to go into the surgery. But maybe something important and serious is missed, even with a high-quality video connection. We don’t know what home-working means for training new staff. It is fine working at home if you know the people at the other end, but more difficult if you have never met the person you are
dealing with. As for online teaching, both in schools and universities – well, there are clear limits to that.
Still the bottom line here is that there will be huge changes in the way we work, changes that will make us more efficient at what we do, and, I hope, help us to do things better. Then the world will have to use the increased productivity to lift living standards for all, and figure out the new jobs to replace those that have been lost. For the moment, though, expect the productivity worries to ebb away.