The contribution of the manufacturing industry to the UK economy has changed markedly over the last 60 years. On average, output in the industry has grown by 1.4% a year since 1948, although it has contracted around the economic downturns in the 1970s and early 1990s, and most recently and notably during the 2008-9 economic downturn. But output growth has been at a slower rate than that for the whole economy, and as a consequence the proportion of whole economy Gross Value Added (GVA) accounted for by manufacturing has fallen since the early 1950s. The change in manufacturing output over the long term is determined primarily by changes in its principle factors of production: labour and capital. An increase in either of these factors will tend to lead to an increase in output – however higher manufacturing output has been achieved despite a steady fall in the number of jobs and broadly stable capital stock. Therefore over this period labour productivity, as measured by output per labour hour worked, has increased. In other words, the manufacturing industry has become more productive. This article will analyse several potential reasons for the increase in manufacturing productivity over the long term such as: a better quality workforce; an improvement in the information technology base; a change in the composition of the UK manufacturing industry; more investment in research and development; capital deepening; and a more integrated global economy. These factors are intended to inform and encourage the debate around changes in manufacturing productivity rather than provide a comprehensive and definitive explanation.
Source: Office for National Statistics licensed under the Open Government Licence v.1.0.