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© Newswise.
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U.S. Labor Productivity Growth Continues to Outpace Other Nations
Further information: Bart van Ark (203) 432-3636 For Immediate Release U.S. LABOR PRODUCTIVITY GROWTH CONTINUES TO OUTPACE OTHER NATIONS Jan. 30 . . . Despite the economic turmoil last year and the sharp slowdown in Gross Domestic Product, U.S. labor productivity growth rose 1.8% against 0.9% for the member nations of the Organization for Economic Cooperation and Development, The Conference Board reports today in a major study. While there was a sharp decline in U.S. GDP growth (1.1% in 2001 vs. 4.1% in 2000), productivity growth remained high because hours worked declined by 0.7 percentage points. Details from this report will be presented by Conference Board Chief Economist Gail Fosler at The World Economic Forum in New York City on February 1. The data show that U.S. productivity continued to outpace most other countries and that information and communication technologies are major drivers of this growth. Productivity in the European Union grew at only 0.6% in 2001, about half of the growth from 1995-2000. Unlike the U.S., the slowdown in GDP growth in the European Union was not accompanied by slower employment growth. "While the European Union continued its strong employment expansion of the last 6 years, it is still registering slow productivity growth," says Bart van Ark, Consulting Director for International Economic Research at The Conference Board and a Professor at the University of Groningen. Labor productivity is a powerful indicator of economic efficiency which measures how much output is obtained per hour of work. Timely labor productivity data are now available for many countries. While estimates of productivity levels are subject to less precision than estimates of productivity growth, they provide important benchmarks and reveal significant details about national differences in economic performance. U.S. PRODUCTIVITY ADVANTAGE WIDENS; JAPAN STALLS U.S. output per hour in 2001 was $4.67 higher than the European Union, up from $4.21 in 2000 and $2.86 in 1995. Japan continued its decade-long stagnation, losing ground to both the U.S. and the European Union. In 2001, productivity growth even turned negative, at -0.3%. The country's productivity relative to the U.S. dropped from about 74% in 2000 to 72% in 2001. Japan's productivity was $5.66 per hour lower than the European Union and $10.33 behind the U.S. The newer OECD member countries -- including the Czech Republic, Hungary, Korea, Mexico, and Poland -- show substantial variation in productivity growth with much lower levels of productivity. On average, their productivity growth slowed down by 2.4 percentage points in 2001, over 1995-2000. But the three Eastern European countries improved their productivity in 2001 by between 2.6% and 3.2%, substantially more than the 0.6% recorded by the average EU member state. Nonetheless, they still trail the EU by about 60%. The differences in comparative performance of OECD countries since the mid-1990's reflect a break in a long-term convergence in productivity levels. "Following World War II, most OECD economies were 'catching-up' with the U.S.," says Robert H. McGuckin, Director of Economic Research at The Conference Board and a co-author of the report. "This process was particularly rapid in the 1960's and continued until the 1990's. Since about 1995, information and communications technology-driven U.S. productivity growth has brought convergence to a standstill, with some notable exceptions like Ireland and Finland." U.S. CONTINUES TO LEAD IN PER CAPITA INCOME Labor productivity has a clear connection to living standards as measured by per capita income: the more hours spent on work and the higher the level of productivity, the higher is per capita income. Thus, differences in per capita income across countries are reflected in labor participation rates. While EU labor productivity in 2001was within 13% of the U.S. level (indeed, four European countries registered even higher productivity levels than the U.S.), Europe was unable to translate these numbers into comparable personal wealth. Average per capita income in the European Union was 33% below U.S. levels in 2001, with only Switzerland, Norway, and Denmark posting income levels within 20% of the U.S. figure. According to McGuckin: "These figures mean that Europe is not translating its productivity into per capita income at the same rate as the U.S. as a result of shorter workweeks and lower percentages of the population working, despite Europe's recent rise in labor input." In 2001, about 60% of the difference between the European Union's average 87% of the U.S. productivity level and its 67% of the U.S. per capita income level came from lower hours worked per worker and the remaining 40% from lower employment participation rates. # # # Source: Performance 2001: Productivity, Employment, and Income in the World's Economies
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