The OECD also highlights a decoupling between productivity growth and higher real average wages in many countries, resulting in continued declines in labour’s share of national income.
In turn, the Compendium shows that the contribution of labour utilisation (hours worked per capita) to GDP growth has risen markedly in a number of countries, notably in the United Kingdom and the United States.
However, rises in labour utilisation reflect two opposing effects: higher employment rates but lower average hours per worker, which points to more part-time working, often in low productivity jobs.
Higher employment rates are welcome. But the fact that they, rather than increases in labour productivity, have been the most important driver of GDP per capita growth in many economies in recent years is a concern for long-term economic prospects, it adds.
The OECD says productivity is ultimately a question of “working smarter” – measured by ‘multifactor productivity’ – rather than “working harder”. It reflects firms’ ability to produce more output by better combining inputs through new ideas, technological innovations, as well as by way of process and organisational innovations, such as new business models.
May 14, 2018 2:23pm