Productivity is closely related to efficiency. Its about how much output, you get for a level of input.
If 1hr of work produces 2 widgets, and a more efficient method comes along to make it 1hr produces 3 widgets, then productivity has raised 50%.
Or if someone looks after 2 children, and is given 2 more to look after then productivity has risen 100%.
- Measuring private sector productivity is relatively straightforward: markets set the value of output produced and inputs used.
- Assessing productivity for public services is much more difficult. Markets in healthcare, education, social services and policing do not exist, so there is limited price information
- Governments like to assume public service outputs were the same as public service inputs – e.g. a GP appointment is both an input and an output – so productivity was thought to be constant over time.
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