One of the many bizarre notions in orthodox economic theory is that workers make free decisions about how much labour they ‘choose’ to provide. If that theory applied in the UK today, it would have to explain why people are working more in the recession than in the boom years – as this week’s economic news indicates. This is an interesting reversal of several occasions in the last 20 years when economists have worried about growth without jobs.
Unless the GDP figures are revised upwards by so much as to explain the job creation, this must mean productivity has fallen – in the sense of output per worker. But output per hour could be much as before, if the number of hours worked has fallen. Could that have happened? Yes, if people are only managing to find enough part-time or temporary work to scrape by and keep themselves off the claimant count, including through self-employment.
That way they would show up in the employment stats, but only be working enough hours to generate much lower levels of output. People are unable to find enough work to fill all the hours they would like to work. That’s ‘like’ as in enough to generate a decent income.