Domesday Live

What is productivity and why does it matter?

Productivity is how much is produced for each hour of work. It is what lets a country get richer: if each hour produces more, wages can rise without prices rising. The UK's has grown much more slowly since 2008 than before, which is the main reason pay has stalled.

Why it happens

• How it is worked out. The ONS divides total output (GDP) by the total hours worked by everyone in the economy.
• What raises it. More and better machinery and technology, better skills and management, and a shift of workers to more productive firms.
• Why the UK is behind. Lower business investment, a long tail of less productive firms, weaker transport links between cities and skills gaps are common explanations.