One of the major issues that the UK economy faces is productivity. This is measured by the amount of economic output that is produced by a unit of labour. Output is measured by gross domestic product (GDP) and labour input is measured by looking at the total number of hours worked and by the number of workers in employment. Although that may sound quite complex, at a small scale for us it will be quite familiar, given that most of us bill clients on an hourly basis.

The UK’s record on productivity is pretty dire. It affects our competitiveness and what we can afford, and – for us as employment lawyers – directly affects much of the regulation we have in our labour market.

GDP per hour in the UK is lower than Italy by more than 10%; lower than the US and France by over 22%; lower than Germany by more than 26%; and lower than the rest of the G7 group of the world’s largest economies by over 16%. The slowdown in productivity growth has been more marked in the UK since 2008 and is predicted to actually decline in the current year.

The consequences of this – if it is not arrested – are that it will be increasingly difficult to increase pay, as such increases need to be paid for out of increased productivity. In turn, this will affect the tax revenue that the Government has available for public services and investment. In the medium to long-term, it will make the UK less competitive and less attractive for inward investment.

The Government, the Bank of England, businesses and economists all agree that ‘something must be done’. As with much in employment law (where economics meets social policy meets politics), the answers seem to fall into two camps – regulate or deregulate.

In the latter camp, low productivity is said to arise from too much labour market regulation, which shuts out competitive intensity and best practice, and allows out-of-date working practices to continue. Some have advocated a ‘996’ working system, apparently already in place for many Chinese technology workers. This involves working 9am to 9pm, six days a week. I am not sure that my output per hour would increase in those circumstances.

In the former camp, there are those that point to countries such as France, Germany and Italy that all have higher productivity than the UK and much more regulated labour markets. They say that what the UK needs is shorter working hours, and greater investment in job security and training.

As with all predictions, they remain just that until something happens – a prediction. Things rarely standstill, however, and it is likely that we will be able to test these theories. The EU Parliament has just approved a package of measures on the rights of workers operating in the so-called ‘gig economy’. These probably go further than the package that the UK has introduced but, for the moment, there is a large measure of alignment. As the UK contemplates its future, it remains to be seen how dynamic or static that alignment will be.

Alex Lock, DAC Beachcroft LLP