The Contribution of Increased Productivity and Efficiency to National Development Presenter Charles...

The Contribution of Increased Productivity and Efficiency to

National DevelopmentPresenter

Charles Douglas, Ph.D.

JFLL Lecture Seminar

September 29, 2011

2Productivity is everybody’s

business

Overview

This presentation will take us through Definition of Productivity Benefits of Improved Productivity Impact of Productivity on Jamaica’s Development Drivers of Productivity Building a Productivity Culture

the Role of Literacy

September 29, 2011

Productivity – Economic Definition

Two Conditions: Efficiency & Effectiveness

Efficiency - A measure of how well resources (Land, Energy, Labour, capital, Materials) are used to produce goods and services.

Effectiveness – Requires that the goods and services produced must satisfy the needs and expectations of customers (quality, utility, price, convenience, timeliness and customer service)

Productivity is everybody’s business 3September 29, 2011

Productivity - Philosophical Definition

Whether we work in the private or public sector, it is important that we see productivity as:

A. A state of mind or an attitude that seeks continuous improvement over what exists (Everything can be improved).

B. A conviction that I will do better today than I did yesterday, and I will make tomorrow better than today (I will add value everyday).

Productivity is everybody’s business September 29, 2011

Benefits of Improved ProductivityProductivity = Baking a Bigger Economic Pie

5

Workerswages

Investorsprofit

dividends

Governmenttaxes

Financiersinterest

Companydepreciation

retained earnings

Gro

wth

September 29, 2011

Benefits of Improved Productivity:Transmission Mechanism

6

Improved Standard of Living

Higher GDP › Higher Per Capita Income

(1) Contribution from

Employment

(2) Contribution from Higher

Capital Intensity

(3) Contribution from Higher Total Factor

Productivity

(4) Quality of Workforce

(5) Quality of Capital & Systems

Contribution from higher productivity


COUNTRY & SECTORS

Jamaica

Manufacturing

Electricity, Gas &Water

Financing, Ins, Real Est. & Business Services

Mining & Quarrying

Transport, Storage & Communication

Agriculture, Forestry & Fishing

Wholesale, Retail, Hotels & Restaurants

Construction & Installation

2007 (constant J$, 1996 = 100)

Avg. Annual Growth 1998-2007

219,624 -0.7

454,578 (4) 2.0

1,329,968 (2) 1.5

506,766 (3) 0.5

1,690,887 (1) 0.4

452,565 (5) 0.4

64,495 (8) -1.8

277,369 (6) -1.4

225,477 (7) -2.3

Labour Productivity by Sectors

7

Source: Estimated by JPC using data from STATINProductivity is everybody’s

business September 29, 2011

8

Jamaica Trails Most Caribbean Countries in Output per Worker (1990 PPP$) .

Output/Worker1998

Output/Worker2007

Avg. Growth Output/Worker 1998-2007

Jamaica 9,862 9,158 -0.7

Trinidad 30,954 51,916 6.0

Barbados 19,394 20,830 0.8

St. Lucia 10,220 10,886 0.8

Source: ILO KILM 18 database, Groningen Growth and Development Centre

Comparative Labour Productivity (LP)


Implications of Labour Productivity Growth Rate

9

1% annual growth in LP = 3 generations (72 years) for income per worker to double

2% annual growth in LP = 1½ generations (38 years) for income per worker to double .

3% annual growth in LP = 1 generation (25 yrs) for income per worker to double .

5% annual growth in LP = ½ a generation (13 yrs) for income per worker to double .


Trends in GDP per Capita and Labour Productivity



Convergence of LP with USA



Total Factor Productivity in LAC Relative to USA

12

20.0 30.0 40.0 50.0 60.0 70.0 80.00.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Relative Productivity in Latin America, 2005)

GDP/Capita relative to United Stated (%)

TFP

rela

tive t

o U

nit

ed S

tate

s (

%)

Productivity is everybody’s business September 29,

2011

Jamaica has been caught in a low growth low productivity trap

This low-growth, low-productivity performance at the national and sector levels must be of great concern to workers, government, employers & trade unions - everybody

This is because productivity is the most critical factor that determines the country’s competitiveness, as well as the standard of living of our people.

September 29, 201113

Synthesis

Productivity is everybody’s business

Technology and Innovation Organizational Structures Supply Chain Management Performance Measurement Productivity Linked Wage Systems Work Ethics Labour-Management Relations Investments (Physical & Human Capital) Reallocation of Resources Waste Reduction

14

Drivers of Productivity


2011

Technology & Innovation – expanding production Possibilities – more output per unit of input

New Organizational Structures – Both physical and social. Example – logical layout of machinery and work areas and good worker management relations

Supply Chain Management -(Internal & External). Internal implies one division providing inputs to another division. External implies that the firm relies of other supplier for its inputs.


business


September 29, 2011

Performance Measurement – what gets measured gets done – provides evidenced-based approach to productivity improvement

Productivity-Linked Promotion or Wage Systems – Compensation or promotions based on performance (applicable to students). Requires measurement of key performance indicators (KPI)

Work Ethics – Qualities employers want from employees - punctuality, commitment, dedication, customer focused, quality-conscious, good deportment, etc.)


business


September 29, 2011

Labour-Management Relations – impact of strikes on company or student productivity (e.g., class distinction between worker & supervisor).

Investments in Physical & Human Capital - Training and skills development is critical to productivity. Energy efficient machinery replacing energy inefficient ones (Air conditioners).

Reallocation of Resources – Moving resources from low to high productivity activities.

Waste Reduction – the cheapest way of increasing productivity (e.g., time wasting).


business


September 29, 2011

“A literate and educated population must be regarded as more productive and desirable, and to tolerate pockets of illiteracy and under education is to tolerate wastage of human potential.” National Literacy Survey, 1994

Jamaica’s Illiteracy rate in 2000 was 13.3% (males – 17.5%, females 9.3%)

18

Building a Productivity Culture: The Role of Literacy


2011

Illiteracy in a workforce leads to waste and additional costs to employers:

Defects in products / poor product quality

Waste of time and resources Overtime hours and time used for rework Training costs Costs associated with accidents Excessive supervisory time

Literacy skills – are always a prerequisite for dealingwith the changing workplace landscape in this era of technological change

Building a Productivity Culture: The Role of Literacy


2011

Increased literacy – Facilitates greater creativity, innovation and greater problem-solving skills. These are great characteristics to have in employees.

A Literate worker force is: –o more “trainable” and “adaptable”o less likely to become easily frustrated on the job,

thus reducing possibilities for absenteeism and job dissatisfaction.

o will help maintain international competitiveness as well as personal success.

20

Building A Productivity Culture: The Role of Literacy


2011

21

Thank you very much!


2011

The Contribution of Increased Productivity and Efficiency to National Development Presenter Charles...

Documents

Transcript of The Contribution of Increased Productivity and Efficiency to National Development Presenter Charles...