US productivity gap with rest of world widens - UN report

2 September 2003 – United States productivity accelerated in 2002, surpassing Europe and Japan in terms of annual output per worker for the first substantial period since World War II, and widening the productivity gap with the rest of the world, according to a new study by the United Nations labour agency.

In Key Indicators of the Labour Market (KILM), the International Labour Organization (ILO) notes that part of the difference in output per worker was due to the fact that Americans worked longer hours than their European counterparts.

Workers in the United States put in an average of 1,815 hours in 2002 compared to major European economies, where hours worked ranged from around 1,300 to 1,800. In Japan, hours worked dropped to about the same level as in the United States, it adds.

The KILM findings show that growth in productivity per person worldwide accelerated from 1.5 per cent during the first half of the 1990s to 1.9 per cent in the second half. Most of this growth was concentrated in industrialized economies (the United States and some European Union countries), and some in Asia (China, India, Pakistan and Thailand). In Africa and Latin American economies, available data showed declines in total economy productivity growth since 1980.

European and other industrialized countries, while achieving slightly lower productivity growth rates on average than the United States, have improved their "employment-to-population ratios," which measure the proportion of people in the population who are working. While unemployment rates in the EU as a whole remained above those in the United States, many European countries were able to maintain or improve their ability to create jobs, while achieving moderate growth in productivity. The EU increased the employment-to-population ratio from 56.1 to 56.7 per cent between 1999 and 2002 while reducing unemployment, the KILM says.

Although the employment-to-population ratio in the United States declined by 1.6, from 64.3 to 62.7 per cent, in the same period, overall it remained consistently higher than the EU.

KILM examines 20 key indicators of the labour market, including employment, unemployment, underemployment, hours worked, labour productivity, types of economic activity and how youth and women fare in the labour markets. For the first time, the KILM also examines agricultural productivity and notes that this sector remains the primary employer in many developing economies. The new analysis suggests that a rise in productivity and employment may be the only way to reduce poverty.

"The overall global trends show that growth is not enough," ILO Director-General Juan Somavia said. "We must make productivity growth and job creation key objectives and pursue policies that combine these objectives with decent work."

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