THE ECONOMIC AND ENVIRONMENTAL IMPACT OF THE HISTORIC AND CLASSIC MOTOR INDUSTRY IN THE UK

19 3.4 Metrics applied Our key economic metrics are turnover, Gross Value Added, employment and compensation of employees. Turnover is simply the sum total of all spending. Since the industry is vertically disintegrated with a large specialist supply chain, summing the turnover will give an exaggerated picture of the scale of the industry since the suppliers’ turnover will be counted again when their input is sold on to the next level in the value chain. However, turnover gives an impression of the amount of activity generated within the sector even if, from an economists’ perspective, there is some double counting. Gross Value Added (GVA) is the economists’ metric of choice for the contribution of a sector. It strips out any double counting when turnover is multiplied up in the supply chain. It also removes any contribution from imports, so it is a true measure of the sector’s contribution to the UK economy Other than a slight difference in the val uation basis, GVA measures are equivalent to the contribution to GDP. Employment is the third metric we use. We measure this from the GVA basis, taking account of the differential productivity in each sector in the supply chain so again there is no double counting. Economists typically measure employment in FTEs (Full Time Equivalents) so if there is part time working and job sharing (not atypical in a sector with craft skills and many older workers) part time work is translated into the equivalent number of full- time jobs. The fourth metric is employee compensation in terms of cost of employment (COE). This again is based on the GVA basis and so measures the labour incomes arising from the industry in the UK.