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The validity of international comparisons of labour productivity

Workforce productivity can be measured in 2 ways, in physical terms or in price terms.

  • the intensity of labour-effort, and the quality of labour effort generally.
  • the creative activity involved in producing technical innovations.
  • the relative efficiency gains resulting from different systems of management, organization, co-ordination or engineering.
  • the productive effects of some forms of labour on other forms of labour.

These aspects of productivity refer to the qualitative dimensions of labour input. If an organization is using labour much more intensely, one can assume it’s due to greater labour productivity, since the output per labour-effort may be the same. This insight becomes particularly important when a large part of what is produced in an economy consists of services. Management may be very preoccupied with the productivity of employees, but the productivity gains of management itself is very difficult to prove. While labor productivity growth has been seen as a useful barometer of the U.S. economy’s performance, recent research has examined why U.S. labor productivity rose during the recent downturn of 2008–2009, when U.S. gross domestic product plummeted.