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Public Enterprise Revisited

A Closer Look at the 1954–79 UK Labour Productivity Record

Chrisafis H. Iordanoglou

The book compares the 1954–79 labour productivity record of 5 expanding public sector industries to that of 24 expanding, capital intensive, mass-production industries in the British private sector. The author shows that the public sector industries’ labour productivity growth was significantly faster than that of the private sector industries. Strikingly, he also finds that the state-owned industries were narrowing their productivity gap with their US counterparts at a significantly faster rate than the private sector industries. Dr Iordanoglou concludes that it is possible that public ownership had – in the historical period investigated – a long-term positive effect on these industries.
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Chapter 5: Questions of Interpretation

Chrisafis H. Iordanoglou


5.1 A SUMMARY OF THE FINDINGS The main task of this study was to establish the labour productivity record of the industries of my sample. The results of my investigations were presented in Chapters 3 and 4. The main conclusions that emerge are summarised below. 5.1.1 The Intertemporal Labour Productivity Growth Results Labour productivity growth has been measured in two alternative ways: by the gross output per employee-hour and by the deflated net output per employee-hour formula. The former measure is more appropriate for the purposes of intertemporal comparisons and the conclusions of Chapter 3 are based on the estimates derived from it.1 These conclusions are the following: G G The gross output per employee estimates for the long period (1954–79) yield the most important result of the intertemporal comparisons: according to the appropriate ranking tests, the rate of labour productivity growth in the public sector industries was significantly faster than that of the private sector industries. The way the productivity indices for the 1954–79 period were constructed permits the breakdown of the long period estimates into five subperiods. This enables us to examine the productivity growth record of our 29 industries in each of these subperiods. It emerges that the public sector industries have shown, on average, faster rates of labour productivity growth in four out of five subperiods.2 The record of the private sector industries was superior only in the 1963–68 subperiod.3 This was due to the exceptionally fast productivity growth rates in...

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