No. Increasing the productivity of the labour force is an important contributor to how fast workers’ incomes improve. Productivity growth allows real wages to increase by lowering prices, leading to real improvements to our standard of living.
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Does Europe have an enough young and growing population? Will that be enough to address the productivity gaps?
Europe’s population is aging. More and more workers, especially the Baby Boomers, are or will be approaching retirement age in the very near future. When this group of workers begins to leave the labour force, it will place great demands on the existing workforce and on the economy as a whole.
Europeans relocating from other parts of the continent or immigration will not address the full shortage of workers in the European economy. In order to successfully meet the challenges of the demographic shift and the high demands of today’s employers, we need to tackle the labour issue from both the supply and demand sides of the equation.
It is important to understand that all companies compete in a global market place and, more often then not, are competing with companies with a greater cost advantage. To ensure European companies are able to sustain themselves, they must look at how they can improve operational efficiencies to maintain their competitive advantage.
Why does productivity matter?
Productivity growth plays an active role in offsetting inflationary pressure and as well as long tern economic growth. This is achieved through greater resource allocation and human resource efficiency, effectiveness and engagement; increased innovation and technology diffusion and capital investment.
Productivity is an essential component to the success and health of every company in Europe and the overall standard of living.
How is productivity defined?
Productivity measures the efficiency with which resources such as labour or capital are employed in the production process. There are two widely used productivity measures; labour productivity and multifactor productivity.
Lean Six Sigma , labour and productivity
What is the difference between labour and multifactor productivity?
Labour productivity is measured as real output per hour worked. Multifactor productivity, a broader measure of efficiency, is measured as real output per unit of combined inputs (capital, labour, etc). In essence, this is the efficiency of all or your factors of production.
Progress in productivity constitutes a significant source of increased standard of living. In the long run, increases in real hourly earnings are tied to productivity gains. The European economy has been able to produce more goods and services over time, not by requiring a proportional increase of resources such as labour, but by making production more efficient. The overall performance of any company, operating in any industry, is comprised of at least seven key criteria:
- effectiveness
- efficiency
- innovation
- productivity
- profitability
- quality
- quality of work life