Why British Unemployment Is So Relatively Low
Simply because productivity has been falling. Output per hour for the whole economy was 3.5% lower in Q2 .Output per worker, a variable that also depends on average hours per worker, fell slightly more, 3.9%. That number if of course basically the same as the 4% drop in GDP. So the drop in per capita GDP can be almost entirely attributed to two factors: the increase in population and a big drop in productivity, with a smaller part being due to a small drop in the average work week. However, the absolute number of employed are basically the same now as when the slump started. As this chart illustrates, when the crisis began both employment and productivity fell. In 2010 and early 2011 there was a moderate recovery in both, but since the second half of 2011, the two has diverged as employment has continued to recover while productivity has started to drop again.