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MACRO-PRODUCTIVITY INDICATORS PROJECT
What is it all about?
The Macro-Productivity Indicators Project is an important and significant output of the Research Unit of The Productivity Council. Its continuity is owed in no small part to collaboration between this organisation, the Barbados Statistical Service and in the earlier years the Central Bank of
Prior to 2003, there was no specific structure in place to thoroughly monitor productivity developments in
The Macro-Productivity Indicators Project focuses on the development of a measurement methodology for productivity in the form of a survey instrument (National Survey of Productivity) to capture data on output, labour hours and compensation within the Accommodation and Manufacturing sectors.
In 2004, The Productivity Council sponsored the project (financially and technically) with technical support and advice from the Central Bank of
These four sectors have been retained and The Productivity Council and the Barbados Statistical Service have been working closely since then, especially with respect to the selection of the sample set of the industries involved.
What are the objectives?
The major objectives of the Macro-Productivity Indicators Project are to:
1. Effectively identify an approach to measure productivity at the macro level.
2. Develop productivity indicators for all economic sectors.
3. Promote the use of productivity indicators within
4. Establish a link among corporate performance, productivity and the government policy formulation.
5. Advocate and promote productivity measurement as a tool to improve organisational performance.
6. Provide a comprehensive assessment of how effectively the country is harnessing its human, physical and technological resources to generate sustainable economic growth.
What are the benefits stemming from the project?
Productivity impacts greatly on the growth in living standards. It means more value is added in production and hence more income is available to be distributed.
At a firm or industry level, the benefits of productivity growth can be distributed in a number of different ways:
· To employers, through more repeat business, word-of-mouth referrals, productivity and sustainability of their businesses;
· To customers, through improved service, product quality and value for money (lower prices);
· To the workforce, through better wages (increases in performance related pay, improved self-esteems and more recognition due to positive feedback and conditions;
· To shareholders and superannuation funds, through increased profits and dividends distributions;
· To the environment, through more stringent environmental protection; and
· To governments, through increases in tax payments (which can be used to fund social and environmental programmes).
Despite this, some persons in the business arena do not or choose not to see the importance of productivity indicators to the overall economy of a country. It is widely known that an increase of productivity, no matter how marginal can have implications for growth, competitiveness, increased earnings and ultimately the standard of living for a country’s citizens. Therefore, it is to this end that the project carries a great deal of statistical, operational and strategic significance to Barbadian businesses and to the economy as a whole. The Macro-Productivity Indicators Project provides insight into some issues such as:
· Efficiency and cost-effectiveness of a company;
· Company output and growth;
· Historic, actual and projected sectoral performance;
· Strategic positioning and options at the micro and macro levels;
· Ways and means of improving process efficiency and total revenue; and
· Profitability.
Productivity indicators also provide policymakers, trade unions, educational institutions and international investors with a clear picture of where
At the national level, the project is able to provide statistically, a valid link between wage increases, inflation, labour and productivity, because labour productivity indicators by sector, the impact of absenteeism and unit labour costs by sector are all derived from the data provided by the National Survey of Productivity.
How can I become a part of it?
As a business your participation in this project is vitally important. The data collected is strictly confidential and the results are strategically important for your company and indeed for the country as a whole. It is therefore critical that executives and managers make an effort to build a culture within their organisation, which emphasizes results, performance measurement and systematic collating and tracking of company data.
Companies are encouraged to volunteer their participation to the project and to facilitate the interviews requested by the enumerators.
EXECUTIVE SUMMARIES
MACRO-PRODUCTIVITY INDICATORS PROJECT
REPORTS FOR THE PERIOD 2003 – 2007
Productivity is one of the most fundamental economic performance indicators. It can be defined in the simplest terms as the ratio between inputs and outputs and can be applied to factors of production either individually or collectively. Generally, inputs are in the form of labour (human resources), capital (physical and financial capital assets), energy, materials and data. These resources are then converted into outputs (goods and services).
Productivity indicators explain how efficiently inputs are being used to generate a given level of output. There are a number of different types of productivity measures, but they can be grouped under one of two headings:
· Single factor/partial productivity measures or
· Multifactor/total productivity measures
Single factor/partial productivity measures express how efficiently an entity is utilising a single factor of production (labour, capital or intermediate inputs) in the production of its outputs, whereas multifactor/total factor productivity measures consider several or all input factors used in the production process.
Productivity growth contributes not only to the incomes of working persons, but also to the well being of the overall society. Essentially, the standard of living of a nation depends on the ability of its firms to achieve high levels of productivity and ultimately to sustain productivity growth over time.
However, despite the importance of productivity, there was no structure in place to systematically monitor productivity developments in
As a result in 2003, The Productivity Council in collaboration with the Central Bank of
In 2004, the National Survey of Productivity was sponsored (financially and technically) by The Productivity Council. In this year, the scope of the project broadened to incorporate two (2) new sectors – financial services and distribution. These four (4) industries have been retained for the following years.
National macro-productivity indicators are calculated using National Accounts statistics. The change in national productivity is computed using the index for real GDP (Central Bank of
Figure 1: Macro-Productivity Growth (% Change)
Computed from: Hours Worked for the Labour Force Survey and Real GDP
Sources:
Survey Based Productivity Indicators
Macro-Productivity Indicators Report 2003
Accommodation Establishments
Based on data derived from the 2003 National Survey of Productivity, productivity growth in the accommodation sector of the economy is estimated to have fallen by approximately 3.7 percent, as the reduction in output was significantly greater than the fall in hours worked. With regards to the apartment hotel sub-sector, productivity declined by 6.2 percent, and in the hotel and apartment sub-sectors productivity contracted by 3.8 percent and 0.8 percent, respectively.
Manufacturing Establishments
With output rising and average hours worked at a similar level as in 2001, the average labour productivity among the manufacturing firms surveyed rose by 5.1 percent. The largest change in labour productivity was recorded in the food, beverage and tobacco sub-sectors (27.5 percent). Double digit rates of productivity growth were also calculated for the printing and publishing (up 12.4 percent) and chemicals (up 29 percent) sub-sectors. However, fairly large negative rates of productivity change were registered by two (2) manufacturing categories: non-metallic mineral products and metal products, machinery and equipment.
Impact of Absenteeism
Empirical estimates of the impact of absenteeism on accommodation and manufacturing establishments are also reported. Absenteeism is measured by the number of uncertified sick days. The results show that, on average, one day of sick leave costs accommodation establishments surveyed approximately $58.63 in lost real output per day. Given that total uncertified sick leave in 2002 was estimated at 4,661, one can infer that the firms surveyed lost approximately $273,274.40, or $23,000.00 per firm, in 2002 on account of uncertified sick leave.
For the manufacturing firms that participated in the 2003 National Survey of Productivity, the loss in net value-added due to one day of worker absence was, on average, $46.89 per day. When combined with the information on uncertified sick leave, one can estimate that absenteeism cost the average manufacturing firm surveyed approximately $10,707.00 in 2002.
Macro-Productivity Indicators Report 2004
Accommodation Establishments
From the 2004 National Survey of Productivity, productivity continued to decline by an estimated 5.9 percent; as a result of a decrease in output coupled with a significant increase in the number of hours worked.
Manufacturing Establishments
Owing to a reduction in hours worked and an expansion in output in 2003, labour productivity in the manufacturing establishments surveyed rose by 10.6 percent.
Distribution Establishments
For the distribution establishments that participated in the National Survey of Productivity 2004, total output rose from $68.9 million in 2002 to $77.2 million in 2003, representing an expansion of 11.9 percent. Hours worked for this industry increased by 23.5 percent, while labour productivity grew by 10.7 percent.
Financial Institutions
The nine (9) financial institutions surveyed in the 2004 National Survey of Productivity recorded increases in the hours worked and output by 0.2 percent and 2.9 percent, respectively; hence labour productivity growth for this industry was calculated at 5.5 percent for 2003.
Impact of Absenteeism
Empirical estimates are calculated for the impact of absenteeism on financial, accommodation, wholesale and manufacturing establishments. In all instances, absenteeism is measured by the number of uncertified sick days. The results show that on average, one day of sick leave costs accommodation establishments approximately $196.20 in lost real output per day. Given that total uncertified sick leave in 2003 was estimated at 2,603 days one can infer that the firms surveyed lost approximately $510,708.60 in 2003 on account of uncertified sick leave.
For manufacturing firms, the loss in net value-added due to one day of worker absence was on average, $57.89 per day. When combined with the information on uncertified sick leave, one can estimate that absenteeism cost the average manufacturing firm surveyed approximately $305,080.30 in 2003.
The results for the distribution establishments show that overall, one day of sick leave costs wholesale and retail firms approximately $156.90 in real output per day. Total uncertified sick leave in 2003 was estimated at 2,569 days, thus one can say that the firms surveyed lost approximately $403,076.10 per firm, in 2003 on account of uncertified sick leave.
The financial institutions experienced a similar phenomenon, in that on average, the shortfall in real output per day, due to one worker’s absence was $120.20. It can be determined through the use of total uncertified sick leave in 2003 that the firms surveyed lost approximately $503,517.00 in 2003.
Macro-Productivity Indicators Report 2005-2006
Accommodation Establishments
The accommodation establishments that participated in the 2005 National Survey of Productivity recorded an expansion of labour productivity by 18.6 percent. This surge was driven mainly by the hotels, apartment hotels and guest house sub-sectors. In the hotel sub-sector, the accommodation establishments involved reported an 18.7 percent increase in productivity, owing to a reduction in the number of hours worked in these establishments and double digit growth in output.
Manufacturing Establishments
The rate of productivity change for the manufacturing establishments survey in 2005 slowed somewhat when compared to 2004. Productivity growth for these establishments is estimated to have risen by 5 percent during the period under review, principally due to significant gains in the chemicals, mining and quarrying, rubber and plastics and the other manufacturing sub-sectors.
Distribution Establishments
Productivity growth in the distribution industry in 2005 was on par with that reported in 2004. Driven primarily by significant gains in the car dealerships and gas stations and wholesale and commission trade sub-sectors, labour productivity for the distribution establishments surveyed rose by 4.6 percent, compared to 4.3 percent in 2004.
Financial Institutions
In 2005, the financial services industry registered a modest expansion in labour productivity of 0.3 percent, as significant productivity gains amongst finance and trust companies surveyed only partially offset declines for commercial banks and credit unions surveyed.
Impact of Absenteeism
Absenteeism is still a major national issue in
For the manufacturing firms, the loss in net value added due to one day of worker absence was on average, $76.91 in 2004 and $72.14 in 2005. The food, beverage and tobacco sub-sectors exhibited the highest loss of $380.74 in 2004 and $367.56 in 2005.
The distribution establishments surveyed lost approximately $47.81 of real output for every day of sick leave lost in 2004 and $44.18 in 2005. If total uncertified sick leave for the distribution sector was 8,520.5 days in 2004 and 11,211.5 days in 2005, it can be stated that the firms lost around, $407,365.11 and $495,324.07 in 2004 and 2005, respectively.
The financial institutions surveyed lost on average $78.44 per day in net output in 2004 and $82.43 in 2005. If this information is combined with that of uncertified sick leave, it can be estimated that absenteeism costs the average financial institution approximately $295,954.12 and $343,238.52 in 2004 and 2005, respectively.
Macro Productivity Indicators Report 2007
Accommodation Establishments
Labour productivity for the accommodation establishments registered no change. Both sub-sectors, the guest houses, apartment hotels and apartments and hotels recorded contractions of 3.3 percent and 0.1 percent, respectively.
Manufacturing Establishments
In 2006, the manufacturing establishments registered a decrease of 1.2 percent; the highest reduction recorded in this industry was in the food and beverages sub-sectors (2.8 percent), while the rubber and plastics had the largest expansion, 7.9 percent. Other sub-sectors with notable levels of growth were furniture (4.5 percent), printing (0.7 percent) and other manufacturing (0.6 percent).
Distribution Establishments
Productivity exhibited a contraction in the distribution industry in 2006 of 1.5 percent. Significant reductions were recorded for all sub-sectors surveyed, with the largest decline in the car dealership and gas stations sub-sector (7.3 percent), followed by retail (4.3 percent) and wholesale and commission trade (2.1 percent).
Financial Institutions
The industry with the best performing firms, on average, was finance (5.3 percent). Growth in this group was generally broad-based, with credit unions reporting slightly higher rates of growth (8.9 percent).
The lowest average absenteeism rate recorded for 2006 was in the accommodation industry (6.40). Overall, with respect to the four industries reviewed, the guest houses, apartments and apartment hotels sub-sector, had the lowest average absenteeism rate (1.82). The distribution firms registered the highest absenteeism rate, owing primarily to the retail sub-sector, which had the largest absenteeism rate of 9.31. This was followed by other manufacturing (8.95), chemicals (8.30) and non-metallic mineral products (8.23).
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