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Productivity is an important part of the economy.

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But what is it?

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This is Dan.

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He runs a local bakery and employs five bakers.

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Together they work 40 hours a day and make 500 buns.

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That's 12 and a half buns for every hour worked.

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Dan buys a better mixer and trains the team.

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With the same people and hours, they now make 750 buns.

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That's 50% more buns per hour.

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Their productivity has risen.

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But extra buns are not the same as extra profit.

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Dan needs to sell them first.

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Every year, wages and employment costs, energy, ingredients and rent can rise.

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Dan must pay those costs from the money the bakery earns.

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If they rise, they can use up some or all of the extra money earned from making and selling

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more buns.

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The mixer costs money too.

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Selling prices and how many buns customers buy matter as well.

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So higher productivity creates an opportunity, not a guarantee of higher profit or higher

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pay.

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Across the economy, productivity usually measures the value added per hour, not just the number

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of products.

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It's about making work more productive, not making people work harder.

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Between 1997 and 2024, UK output per hour rose by an estimated 40.7%.

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But how much of that progress reaches businesses, workers and households?

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Explore the evidence at UK Facts.