Worker Output Productivity Measure

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A Worker Output Productivity Measure is an economic output measure based on the proportion of economic output per worker (for some labor population over a time period).

References

2021

• (Wikipedia, 2021) ⇒ https://en.wikipedia.org/wiki/Workforce_productivity Retrieved:2021-6-28.
• Workforce productivity is the amount of goods and services that a group of workers produce in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity, often referred to as labor productivity, is a measure for an organisation or company, a process, an industry, or a country.

Workforce productivity is to be distinguished from employee productivity which is a measure employed at individual level based on the assumption that the overall productivity can be broken down to increasingly smaller units until, ultimately, to the individual employee, in order be used for example for the purpose of allocating a benefit or sanction based on individual performance (see also: Vitality curve).

In 2002, the OECD defined it as "the ratio of a volume measure of output to a volume measure of input". [1] Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e. adjusted for inflation. The three most commonly used measures of input are: # hours worked, typically from the OECD Annual National Accounts database

1. workforce jobs; and
2. number of people in employment.
1. OECD Manual: Measuring Productivity; Measurement of Aggregate and Industry-Level Productivity Growth. (2002)

2021

• (Wikipedia, 2021) ⇒ https://en.wikipedia.org/wiki/Workforce_productivity#Measurement Retrieved:2021-6-28.
• Workforce productivity can be measured in two ways, in physical terms or in price terms.
• the intensity of labour-effort, and the quality of labour effort generally.
• the creative activity involved in producing technical innovations.
• the relative efficiency gains resulting from different systems of management, organization, co-ordination or engineering.
• the productive effects of some forms of labour on other forms of labour.
• These aspects of productivity refer to the qualitative dimensions of labour input. If an organization is using labour much more intensely, one can assume it's due to greater labour productivity, since the output per labour-effort may be the same. This insight becomes particularly important when a large part of what is produced in an economy consists of services. Management may be very preoccupied with the productivity of employees, but the productivity gains of management itself is very difficult to prove. While labor productivity growth has been seen as a useful barometer of the U.S. economy’s performance, recent research has examined why U.S. labor productivity rose during the recent downturn of 2008–2009, when U.S. gross domestic product plummeted. [1] The validity of international comparisons of labour productivity can be limited by a number of measurement issues. The comparability of output measures can be negatively affected by the use of different valuations, which define the inclusion of taxes, margins, and costs, or different deflation indexes, which turn current output into constant output. [2] Labor input can be biased by different methods used to estimate average hours [3] or different methodologies used to estimate employed persons. [4] In addition, for level comparisons of labor productivity, output needs to be converted into a common currency. The preferred conversion factors are Purchasing Power Parities, but their accuracy can be negatively influenced by the limited representativeness of the goods and services compared and different aggregation methods. [5] To facilitate international comparisons of labor productivity, a number of organizations, such as the OECD, the Groningen Growth Centre, International Labor Comparisons Program, and The Conference Board, prepare productivity data adjusted specifically to enhance the data’s international comparability.
1. International Labor Comparisons Program International comparisons of manufacturing productivity and unit labor costs trends. Bureau of Labor Statistics
2. Susan Fleck International comparisons of hours worked: an assessment of the statistics. Monthly Labor Review, May 2009
3. Gerard Ypma and Bart van Ark Employment and Hours Worked in National Accounts: a Producer’s View on Methods and a User’s View on Applicability Groningen Growth and Development Centre, University of Groningen and The Conference Board
4. International Labor Comparisons Program International comparisons of GDP per capita and per employed person. Bureau of Labor Statistics

2021

• (Wikipedia, 2021) ⇒ https://en.wikipedia.org/wiki/Productivity#Labour_productivity Retrieved:2021-6-28.
• In macroeconomics, a common partial productivity measure is labour productivity. Labour productivity is a revealing indicator of several economic indicators as it offers a dynamic measure of economic growth, competitiveness, and living standards within an economy. It is the measure of labour productivity (and all that this measure takes into account) which helps explain the principal economic foundations that are necessary for both economic growth and social development. In general labour productivity is equal to the ratio between a measure of output volume (gross domestic product or gross value added) and a measure of input use (the total number of hours worked or total employment). : $\text{labour productivity} = \frac{\text{output volume}}{\text{labor input use}}$ The output measure is typically net output, more specifically the value added by the process under consideration, i.e. the value of outputs minus the value of intermediate inputs. This is done in order to avoid double-counting when an output of one firm is used as an input by another in the same measurement. In macroeconomics the most well-known and used measure of value-added is the Gross Domestic Product or GDP. Increases in it are widely used as a measure of the economic growth of nations and industries. GDP is the income available for paying capital costs, labor compensation, taxes and profits.(OECD 2008,11) Some economists instead use gross value added (GVA); there is normally a strong correlation between GDP and GVA. (Freeman 2008,5)

The measure of input use reflects the time, effort and skills of the workforce. The denominator of the ratio of labour productivity, the input measure is the most important factor that influences the measure of labour productivity. Labour input is measured either by the total number of hours worked of all persons employed or total employment (head count). (Freeman 2008,5) There are both advantages and disadvantages associated with the different input measures that are used in the calculation of labour productivity. It is generally accepted that the total number of hours worked is the most appropriate measure of labour input because a simple headcount of employed persons can hide changes in average hours worked and has difficulties accounting for variations in work such as a part-time contract, leave of absence, overtime, or shifts in normal hours. However, the quality of hours-worked estimates is not always clear. In particular, statistical establishment and household surveys are difficult to use because of their varying quality of hours-worked estimates and their varying degree of international comparability.

GDP per capita is a rough measure of average living standards or economic well-being and is one of the core indicators of economic performance. (OECD 2008, 14) GDP is, for this purpose, only a very rough measure. Maximizing GDP, in principle, also allows maximizing capital usage. For this reason, GDP is systematically biased in favour of capital intensive production at the expense of knowledge and labour-intensive production. The use of capital in the GDP-measure is considered to be as valuable as the production's ability to pay taxes, profits and labor compensation. The bias of the GDP is actually the difference between the GDP and the producer income. (Saari 2011,10,16)

Another labour productivity measure, output per worker, is often seen as a proper measure of labour productivity, as here: “Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.“ This measure (output per worker) is, however, more problematic than the GDP or even invalid because this measure allows maximizing all supplied inputs, i.e. materials, services, energy and capital at the expense of producer income.