Monday, March 03, 2014

Productivity gains

It is usual to know reports about productivity perfomance, but it is not that much usual to understand the relevance of improving productivity.- The latest report says that Luxemburg workers are the most productive of the world.This outcome come out of the total product divided by the employed labor force in there.It is not a reliable indicator for the "true " productivity, but it says something about the standard of labor force perfomance.However, as any average it hides the details, and somehow misslead what really is the productivity level. The "true productivity " which counts is the marginal one. This is the last worker contribution to output.Inside the firm,It depends on humnan capital, specific skills,management models and policies. Outside the firm, it depends on macroeconomic and microeconmic policies, and the institutional framework which reduces transaction cost (low corruption practices, law enforcement, property rights protection,efficient public administration management). High productivity imply a lot of benefits, such as higher wages, better and more efficient access to business opportunities, better share of global output value added ,and higher per capita income.In other words better living conditions.- Besides, Countries with high productivity levels , become more competitive.Productivity becomes a source of competitiveness . The key question is why with such benefits , there are countries which seems not to care about it?.Well a proposal is that productivity is a long term goal.It is linked to education system, cultural values, and business practices and its management models.-