On new guidance note for productivity measurement and analysis

As recent discussions at the ILO Governing Body have highlighted, productivity is a key condition for sustained economic growth as well as to advance decent work. Productivity gains provide space for wages and working conditions to improve, especially where adequate labour standards are in place. More productive workers and enterprises also generate public revenues that can be invested to address the multiple and evolving challenges of development, further contributing to a virtuous circle of productivity and decent work.

One key thing with promoting productivity is understanding how to measure it. There are multiple ways to study productivity for an enterprise or a production line. At the national level, when it comes to official productivity data, the field is fairly well sign-posted – as much as for instance, when measuring GDP or unemployment rates. This guidance note is a resource for statisticians and economists to acquaint themselves with the key standards for official productivity measurement from the UN, OECD and ILO. It also contributes to international guidance on aspects that may not have received sufficient attention and may matter particularly for developing countries. Changes in the quality of labour, not just its quantity, matter a great deal in the way the “contribution of labour” to the economy is accounted for. Sectoral heterogeneity, structural transformation, the informal economy or gender pay gaps are critical features that warrant particular attention, especially in developing countries.

Q. What particular challenges do developing countries face in producing detailed and regular productivity statistics?

Productivity data is key to inform economic policies and social dialogue but its production is still rather patchy in developing countries. This is often not for lack of the underlying statistical data as key data on employment, capital and GDP is available in many countries that do not regularly produce productivity indicators. Two issues are at stake. One is the learning curve: productivity measurement (especially multi-factor productivity) is about statistical, econometric and macroeconomic expertise. This first challenge is also related to the second, and perhaps most crucial aspect: coordination and collaboration. Data and knowledge are often available but dispersed. Several departments within national statistical offices, and other stakeholders – productivity commissions, central banks, ministries of labour or industry — need to come together for the multiple strands of data to be weaved together by multidisciplinary teams.

Q. In what ways can policymakers, national statisticians and economists use the guidance provided in this Note to prepare productivity data to help inform decision-making processes and advance decent work?

Robust data on labour and multifactor (also known as total-factor) productivity is a key metric for economic and social policy. It is critical to policy and collective bargaining on wages, working time and other working conditions, and therefore to the equitable distribution of economic gains. Sectoral data on productivity is a major parameter for industrial/sectoral policies, and to an understanding of the pace and direction of structural transformation. Productivity also matters for macroeconomic and labour market policies, skills and enterprise development and other aspects of a conducive “employment policy framework”, both in interpreting the impact of past policies and in considering future directions.

Q. Can you offer practical examples of how the guidance provided in the Note has been applied or is expected to be applied?

We’ve worked so far in three countries, Ghana, South Africa and Viet Nam, as part of the Productivity Ecosystems for Decent Work (PE4DW) Programme, thanks to the support from State Secretariat for Economic Affairs of Switzerland (SECO) and Norwegian Agency for Development Cooperation (NORAD). We’ve learned a lot from our work with national statistical offices and other relevant partners there, much of which has contributed to this Guide. We’re helping the national authorities in gathering, harmonising and consolidating the underlying data, and then computing it for the production of data series covering two to three decades. This will allow national authorities to publish for the first time or expand existing national productivity reports. This work also brings in the “end-users” of the data, from national planning commissions to ministries of labour, industry and trade, agriculture, or education, as well as the employers’ and workers’ organisations, so their policy interests are taken into account and that they know what to expect for their own purposes.

Q. Finally, will there be follow up to the Guidance Note, perhaps focusing on its implementation and lessons learned?

The bet is that new or improved evidence on productivity dynamics will allow for better policy and dialogue on key issues for growth and decent work, on employment and industrial policies, wages and other aspects of the decent work agenda. And then, yes, we hope to continue to learn and for the Note to improve over time, based on experiences, feedback and contributions from partners and users.