Zombies drain Britain's economy of productivity

[Syt]

http://www.guardian.co.uk/business/2013/feb/01/employment-rising-growth-falling-zombie-companies

How can employment rise when growth falls? Because of zombie companies

Report says decline in UK productivity is in part due to banks propping up debtor firms while declining credit to start-ups

Britain's combination of weak growth and rising employment is explained by a flexible labour market, weak investment and the proliferation of "zombie" companies, according to a leading tax and spending thinktank.

In the latest attempt to explain why jobs are increasing while national output is falling, the Institute for Fiscal Studies said there was a "dramatic contrast" with the huge job losses during the recessions of the early 1980s and 1990s.

But there was no evidence for some of the common explanations – that firms were hoarding labour or that the sharp drop in productivity had been caused by the demise of financial services, it said. Instead, the thinktank identified three factors – falling real wages, low business investment and misallocation of capital – as the main reasons workers were producing less now than they were before the recession began in 2008.

Wenchao Jin, a research economist at the institute, said: "The fall in labour productivity seems to have been driven by low real wages and low firm investment. Productivity slowdown has happened right across the economy. They have not been driven by a change in the composition of the economy nor by a change in the composition of the workforce."

The IFS said more people were working but were producing 2.6% less per hour than five years ago and 12.8% less than they would have done had the pre-recession trend in productivity continued.

A decline in real wages (earnings growth below the rate of inflation) had allowed firms to employ more workers than they otherwise would otherwise have done, the IFS said. Labour supply had been increased owing to falls in asset prices, pension reform and benefit changes that had encouraged people to seek work, and this had made it more difficult for those in jobs to protect their wages at the expense of those looking for jobs.

The study found the big drop in business investment – 16% lower than its pre-recession peak – also had an impact on productivity. "If workers have less, and less good, capital to work with they will produce less," the IRS said. "Misallocation of capital is also likely to be reducing productivity. An impaired financial sector that is extending forbearance to low productivity firms while being more risk averse in funding new projects seems to be reducing firm entry and exit."

[Josquius]

This sounds familiar....Is Britain becoming: Japan?

[crazy canuck]

So the Zombie apocalypse really has begun

[jimmy olsen]

So the Zombie apocalypse really has begun

The trailers for World War Z have been so disappointing.