Productivity (GVA per hour worked)

Measuring labour productivity

Labour productivity refers to the economic output of individual workers. The ONS’s preferred measure of labour productivity is GVA per hour worked. This is more useful than alternative productivity measures such as GVA per job or GVA per worker because it takes account of different employment structures such as variations in rates of part-time working or in average hours per job.

GVA per hour worked statistics include smoothed and unsmoothed data, with the former providing a less volatile time series. Most of the charts on this page show unsmoothed data, which gives a more realistic reflection of the initial impact of Covid-19 on productivity in 2020.
 

Labour productivity in the North East

In 2021, GVA per hour worked in the North East LEP area was £32.02, 11% below the England excluding London equivalent. Having increased in 2020 due to fewer hours being worked in less productive sectors, GVA per hour decreased in 2021 compared to 2020 as Covid-19 restrictions were lifted. There were also specific issues in 2021 in the North East automotive sector, which is one of the most productive sectors in the North East but has been impacted by semiconductor shortages globally. 

Output was 2% higher than in 2019 in nominal terms but has fallen compared to 2019 in real terms. The gap between GVA per hour worked in the North East and England excluding London was also the largest recorded since 2008.

In the years up to 2019, the North East’s increase in overall output was primarily being driven by increases in productivity per hour, with the number of hours worked remaining largely unchanged. The number of hours worked in the region was slightly less in 2021 than in 2019 with labour participation mostly recovering from the pandemic.
 

Comparisons between different areas

North East GVA per hour worked in 2021 was the second lowest among the eight-core city LEP areas. However, the differences between these cities were not especially large and all except from the West of England had a productivity level below that of England excluding London.

From 2019 the North East’s productivity growth was low compared to the core cities. The percentage increase of 2% was the lowest of the core cities and half the percentage increase of the next slowest growing area. This is likely due to issues in the automotive sector referenced above, with Sunderland, the centre of the automotive supply chain in the region, seeing an 11% decrease in productivity compared to 2019. 

Taking a longer view the North East’s productivity growth since 2008, while lower than the national average, has been comparable to the rest of the core cities. Only D2N2 and the West Midlands have seen productivity growth significantly higher than the North East. Within the North East productivity growth has been highest in Northumberland and Newcastle.
 

Local authority data

The ONS also publishes smoothed local authority productivity data which can be explored using the map below. Newcastle, North Tyneside and Sunderland have relatively high productivity in the North East LEP. Overall, all North East local authorities have relatively low productivity compared to many local authorities in the South of England.