Business Week: "The gap is even widening. This year the U.S. should record productivity gains of 3.3%, according to Eurostat, the statistical agency of the European Union. That's almost twice the rate of France and Germany and well above the British rate (yes, even dynamic Britain is struggling in this area). Europe now has an hourly output per worker some 20% below American levels."
<>Here's the eurostat labour productivity table upon which the "20% below American levels" was probably based: *http://tinyurl.com/522ng* <> Me: The table gives US productivity relative to an EU index number of 100. The U.S. index number is 123.5, which if you want to express it as the amount that Europe is below the American levels is actually 19%, not 20%. By "Europe", I assume BW means the 15 country EU. So then why is the comparator the single country of the U.S. and not the three country NAFTA?
The odd thing about that 20% figure is that a very large chunk of the difference -- about a third of it -- suddenly appeared last year. The other two-thirds is little changed from 10 years earlier. I smell a rat in such a sudden change in comparative productivity. I suspect it has more to do with financials than it does with physical "output per hour worked". Could the housing bubble and extreme low interest rates be part of this picture?
Here is what the Eurostat site says about their productivity numbers:
"Eurostat produces the structural indicators b1 and b2 from the ratio between GDP expressed in purchasing power standards and the number of persons employed (b1) or the hours actually worked in the economy (b2). For the EU and its Member States, Eurostat uses National Accounts labour data for both total persons employed and hours worked. However, hours actually worked data do not always reach the same standard of reliability as other national accounts data. This problem is currently addressed within the European Statistical System, and hours worked data is expected to achieve a higher degree of harmonisation in the mid-term future.
<>"Actually, Eurostat does not receive explicit hours worked data from some Member States, and therefore multiplies the number of persons employed by average hours worked per year. In most cases, the figure for average hours worked per person is drawn from OECD’s published figures. Eurostat concludes that it is using the best source of information currently available for this figure, though it expects better data in 2004. <>For the US, the GDP and headcount US employment (for indicator b1) are derived from the US national accounts as compiled by the US Bureau of Economic Analysis (BEA). For the calculation of indicator b2 for the US, Eurostat has, with effect of March 2003, switched to the US Bureau of Labor Statistics (BLS) hours worked data. These are considered to be conceptually closer to the EU hours worked data, and they are used by BLS for the calculation and publication of quarterly productivity data for both labour and multi-factor productivity.
"Furthermore, a clear distinction must be made between the "domestic employment" (all persons employed in the domestic, irrespective of their residence) and the "national employment" concept (all persons employed who are resident in the country). For most countries this distinction is actually relatively small, though it shows most clearly in the case of Luxembourg (where domestic employment is over 40% higher than national employment). Since the domestic employment concept is more appropriate for productivity measurement, Eurostat, given improved availability of domestic concept data, has switched to using domestic employment concept in the structural indicators with effect from beginning 2003."