2. Things you need to know about this release

This release reports labour productivity estimates for Quarter 4 (Oct to Dec) 2018 for the whole economy, the UK regions at NUTS1 level and a range of industries, together with estimates of unit labour costs. Productivity is important as it is considered to be a driver of long-run changes in average living standards.

This edition forms part of our quarterly productivity bulletin, which also includes an overarching commentary, quarterly estimates of public service productivity and quarterly estimates of multi-factor productivity.

Labour productivity is calculated by dividing output by labour input. Output refers to gross value added (GVA), which is an estimate of the volume of goods and services produced by an industry, and in aggregate for the UK as a whole. Labour inputs in this release are measured in terms of workers, jobs (“productivity jobs”) and hours worked (“productivity hours”).

This release also reports estimates of unit labour costs (ULCs), which capture the full labour costs – including social security and employers’ pension contributions – incurred in the production of a unit of economic output. Labour costs make up around two-thirds of the overall cost of production of UK economic output. Changes in labour costs are therefore a large factor in overall changes in the cost of production. If increases in labour costs are not reflected in the volume of output, this can put upward pressure on the prices of goods and services, therefore this is a closely watched indicator of inflationary pressure in the economy.

Following the recent productivity user forum, we are exploring streamlining this release into three separate publications focusing on labour productivity, unit labour costs and regional accounts. We would be interested in users’ views on whether this may be positive, please send us your comments by email to productivity@ons.gov.uk.

The equations for labour productivity and ULCs can be found in the Quality and methodology section of this release.

The output statistics in this release are consistent with the latest Quarterly national accounts published on 29 March 2019. Note that productivity in this release does not refer to gross domestic product (GDP) per person, which is a measure that includes people who are not in employment. Regional productivity figures presented in this release use the unbalanced income measure of current price gross value added and are consistent with the Regional GVA NUTS1 published on 10 December 2018.

The labour input measures used in this release are consistent with the latest labour market statistics, as described further in the Quality and methodology section of this bulletin.

Unless otherwise stated all figures are seasonally adjusted.