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The Contribution of Increased Productivity and Efficiency to National Development Presenter Charles Douglas, Ph.D. JFLL Lecture Seminar September 29, 2011.

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Presentation on theme: "The Contribution of Increased Productivity and Efficiency to National Development Presenter Charles Douglas, Ph.D. JFLL Lecture Seminar September 29, 2011."— Presentation transcript:

1 The Contribution of Increased Productivity and Efficiency to National Development Presenter Charles Douglas, Ph.D. JFLL Lecture Seminar September 29, 2011

2 2 Productivity is everybodys business Overview This presentation will take us through Definition of Productivity Benefits of Improved Productivity Impact of Productivity on Jamaicas Development Drivers of Productivity Building a Productivity Culture the Role of Literacy September 29, 2011

3 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 everybodys business 3 September 29, 2011

4 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 everybodys business September 29, 2011

5 Benefits of Improved Productivity Productivity = Baking a Bigger Economic Pie 5 Workers wages Investors profit dividends Government taxes Financiers interest Company depreciation retained earnings Growth September 29, 2011

6 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 Productivity is everybodys business September 29, 2011

7 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 , ,578 (4)2.0 1,329,968 (2) ,766 (3)0.5 1,690,887 (1) ,565 (5)0.4 64,495 (8) ,369 (6) ,477 (7)-2.3 Labour Productivity by Sectors 7 Source: Estimated by JPC using data from STATIN Productivity is everybodys business September 29, 2011

8 8 Jamaica Trails Most Caribbean Countries in Output per Worker (1990 PPP$). Output/Worker 1998 Output/Worker 2007 Avg. Growth Output/Worker Jamaica9,8629, Trinidad30,95451, Barbados19,39420, St. Lucia10,22010, Source: ILO KILM 18 database, Groningen Growth and Development Centre Comparative Labour Productivity (LP) Productivity is everybodys business September 29, 2011

9 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. Productivity is everybodys business September 29, 2011

10 Trends in GDP per Capita and Labour Productivity 10 Productivity is everybodys business September 29, 2011

11 Convergence of LP with USA 11 Productivity is everybodys business September 29, 2011

12 Total Factor Productivity in LAC Relative to USA 12 Productivity is everybodys business September 29, 2011

13 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 countrys competitiveness, as well as the standard of living of our people. September 29, Synthesis Productivity is everybodys business

14 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 Productivity is everybodys business September 29, 2011

15 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. 15 Productivity is everybodys business Drivers of Productivity September 29, 2011

16 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.) 16 Productivity is everybodys business Drivers of Productivity September 29, 2011

17 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). 17 Productivity is everybodys business Drivers of Productivity September 29, 2011

18 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 Jamaicas Illiteracy rate in 2000 was 13.3% (males – 17.5%, females 9.3%) 18 Building a Productivity Culture: The Role of Literacy Productivity is everybodys business September 29, 2011

19 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 dealing with the changing workplace landscape in this era of technological change Building a Productivity Culture: The Role of Literacy Productivity is everybodys business September 29, 2011

20 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 Productivity is everybodys business September 29, 2011

21 21 Thank you very much! Productivity is everybodys business September 29, 2011


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