> BusinessWeek Online
>
> AUGUST 2, 2004
>
> EUROPEAN BUSINESS
>
> Is Europe Suffering From Productivity Paralysis?
>
> If it doesn't boost spending on tech, Europe will fall further behind
>
> Why can't Europe be more productive? That's a question investors,
> executives, and politicians are asking with increasing urgency.
Boosting
> labor productivity is the key to creating higher profits, improving
living
> standards, and keeping prices stable. For decades after World War II,
Europe
> kept pace or even surpassed the U.S. in productivity growth. But since
1995,
> Europe has trailed America in this vital metric.
> http://www.businessweek.com/magazine/content/04_31/b3894078_mz054.htm
>
Is not the "productivity" measure really an indicator of the value of the output per worker, rather than unit of labor (ie. hour or FTE worker)? With that in mind - longer ours worked will show as "higher productivity" even though the actual productivity per unit of labor is the same or lower. Mind that the US is the only industrialized country that does not have any legally mandated vacation time, and paid vacation is about a third of that in Europe.
Another issue - such a productivity measure is affected by the dollar value of the output. So say, if a sector of the US industry employs an X number of people in the US and has an output of Y dollars, the productivity would be Y/X -even if some of that Y was produced overseas. Stated differently, the actual measure of productivity of that US firm should be measured as Y/(X+Z) where Z represents foreign labor working for that company but disappearing from the equation through internal transfers within the multinational corporations.
So the bottom line is that the supposed higher productivity of the US firms is likely an artifact of longer working hours of the US labor and foreign labor that is not accounted for.
Am I missing anything? Doug?
Wojtek