Comparative Levels of Labour Productivity in Dutch and British Manufacturing

Abstract

‘And coming home, did go on board Sir W. Petty's Experiment—which is a brave roomy vessel—and I hope may do well. So went on shore to a Dutch house to drink some Rum, and there light upon some Dutchmen, with whom we had a good discourse touching Stoveing and making of cables. But to see how despicably they speak of us for our using so many hands more to do anything then they do, they closing a cable with 20 that we use 60 men upon’ (Samuel Pepys' diary for 13 February 1665)This article compares the output per person-hour in 16 branches constituting the total manufacturing sector of the Netherlands and the United Kingdom. The comparatively poor productivity performance of British industry, as documented in previous studies comparing Britain with Germany and the USA, is confirmed in this new comparison with a much smaller economy in the 1980s. The article examines differences in the industrial composition in the manufacturing sectors of the two countries. Part of the productivity gap is accounted for by the stronger concentration of Dutch manufacturing in capital-intensive industries and in the production of semimanufactured goods. However, a bigger slice of the gap must be attributed to factors such as differences in the pace of introducing new technologies in some of the branches, the quality of the labour force and the utilisation of the capital stock. The article also explores the relation between the average size of manufacturing units and the degree of vertical integration.