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Productivity |
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Definition of ProductivityProductivity is a concept that is understood differently by different people.
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Definitions |
| General |
Ratio of output to input. |
| Trade Unionists |
A capitalist ploy to exploit or lay off workers |
| National Trade Union Congress of Mauritius |
“Productivity is a process of continuous improvement in the production/supply
of quality output/service through efficient, effective use of inputs, with
emphasis on teamwork for the betterment of all.”
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| Asian Productivity Organisation |
"Productivity is the belief in human progress. It is a state
of mind which aims at perpetual improvement
It is a ceaseless effort to apply new technology and new methods for the
welfare and happiness of mankind. It is the training of the minds
and the development of attitudes of the people as a whole which
determines whether the nation will realize high productivity and an affluent
life or low productivity and poverty." |
| European Productivity Agency, formulated in Rome in 1959 |
“Productivity is, above all, a state of mind. It is an attitude
that seeks the continuous improvement of what exists. It is a conviction
that one can do better today than yesterday, and that tomorrow will be
better than today. Furthermore, it requires constant efforts to adapt
economic activities to ever-changing conditions, and the application of
new theories and new methods. It is a firm belief in the progress of humanity.”
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| NPCC |
Productivity then is to do more with less exertion in less time.
An analogy is the cart with square wheels (Figure 1) carrying a load
of round wheels to show that hard work is not necessarily productive work;
smart work is.
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Determinants of Productivity
At the national level and for operational ease, productivity improvement can
be schematically conceived as the result of a combination of four factors:
<h6>Accumulation of human capital</h6>
Human resources are the key to productivity enhancement. In addition to developing
the right attitude, they must also have the right skills and knowledge base
to be entrepreneurial, to seize opportunities, to innovate and add value continuously.
While much of the basic skills and knowledge are imparted in the formal education
and training system, a non-formal approach has also to be adopted to optimise
the human resource potential with respect to team work, leadership skills, creativity
and innovation, ICT skills, parenting skills. The NPCC has been using CATs (Civic
Action Teams) as the major tool for this type of human resource development.
Innovation
For sustained competitiveness it is important that a nation is innovative, i.e.
it should be continuously exploring new ways of doing things. The development
of Mauritius has been factor-driven till the nineties. As the factor costs have
started rising as a result of economic growth, new sources of competitive advantage
will have to be found to ensure that the standard of living of all Mauritians
is improved. Therefore, policy makers at all levels and in all sectors of the
economy will have to think out of the box to improve on processes, products,
and market positioning.
Accumulation of physical capital
The most obvious and universally accepted factor influencing productivity is
capital. But it is often overlooked that it is a co operant factor, i.e. it
adds value by being combined with other factors. Hence, investment in technology
alone will not ensure productivity gains. Optimal utilization of machinery and
equipment is a major source of enhanced competitiveness. This can occur only
if there is enough demand for a particular sector product. Absence of critical
mass can be compensated by clustering, the sharing of facilities to reap the
benefits of economies of scale.
Business Environment
As has been well defined in the World Competitiveness Report, while the macroeconomic
framework is important, yet the determining factor of productivity growth is
found at the microeconomic business environment, notably the flow of information,
the regulatory and legal framework, the effectiveness of support institutions:
Macroeconomic policies fostering high rates of capital investment will
not translate into rising productivity, for example, unless the forms of investments
are appropriate, the company skills and supporting industries are
present to make investment efficient and strong competitive pressures
and adequatecorporate governance provide the needed market
discipline. In Asia, for example, it was weaknesses in these areas that brought
down economies that looked solid in terms of macroeconomic indicators. Moreover
high rates of public investment in human capital will not pay off unless a nation’s
microeconomic circumstances create the demand for skills in companies. Removing
distortions in exchange rates and other prices will eliminate impediments to
productivity, but microeconomic foundations must be in place if productivity
is actually to increase. The prudence of foreign debt levels depends on exactly
what the capital is invested in, together with the microeconomic fundamentals
surrounding its deployment and governance. Regulating overall debt level is
less important, in many ways, than improving the microeconomics foundations.
For sound policies at the macroeconomics level to translate into an
increasingly productive economy, then, parallel microeconomic improvements must
take place
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?Education is that which discloses to the wise and disguises from the foolish their lack of understanding.? - Ambrose Bierce |
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