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25 Feb 2015 10:18am

OECD: UK must fix productivity

The UK must boost labour productivity if it is to see more inclusive growth, according to the latest economic survey from the Organisation for Economic Co-operation and Development (OECD)

The survey found that while annual growth in the UK rose 2.6% in 2014 – the fastest in the G7 – slow labour productivity had held back real wages and improvements in living standards.

OECD secretary general Angel Gurría said the UK had made “tremendous progress” in moving on from the economic crisis, but said that much needs to be done to ensure improvements were felt by all.

“The UK has made tremendous progress exiting from the worst economic crisis of our lifetime,” Gurría said. “Job creation is remarkable and growth is strong, but the UK has to finish the job.

“Boosting productivity is essential to making this recovery durable and to ensuring that the benefits are shared by all.

“This requires further efforts to improve infrastructure, enhance access to finance for sound businesses and promote skills.”

Gurría added that rising levels of inequality had knocked 9% off UK growth over the last 25 years – more than in the US, Italy and Sweden. “This is not just about numbers,” Gurría said. “It is about people’s lives.”

Chancellor George Osborne said he was pleased that the OECD had recognised how welfare reforms "had made work pay" and said the government would continue "to deliver sustainable increases in our standard of living".

The findings were welcomed by Labour MP Chris Leslie, the shadow chief secretary to the Treasury, who said that waiting for wealth to “trickle down” would not work in the long run.

Leslie said, “The OECD is right to highlight the challenge of increasing productivity in order to sustainably raise living standards and so get the deficit down.

“[Labour’s] plan includes cutting business rates for small firms, reforming the banking sector, investing in training and apprenticeships and keeping Britain in a reformed EU.

“Government standing back and hoping wealth will trickle-down from the top to everyone else simply won’t work,” he added.

“We need a recovery that reaches kitchen tables across Britain, not one which has left working people £1,600 a year worse off since 2010.”

Oliver Griffin

 

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