The productivity gap

Americans are, and will continue to be, the most economically fruitful people in the world. The productivity gap -- measured as value added per person employed -- between the United States and most developed economies continues to widen.

The United States showed the highest labour productivity levels in 2006 measured as value added per person employed per year, at $63,885, well ahead of Ireland ($55,986) and Luxembourg ($55,641).

Labour productivity growth in the United States accelerated after 1995 following a long-term slowdown after the 1970s oil shocks. It is a combination of Spencerist brutal competition, dynamism and innovativeness:

• Annual working hours per person employed are considerably higher in the United States than in the majority of European economies.
• US managers are perceived to be more competent than their European counterparts, employing more aggressive human resources practices, promoting good performers quickly and getting rid of weaker performers.
• Productivity growth in sectors that intensively use information and communication technologies (ICT) -- retail, wholesale and financial intermediation -- has accelerated faster in the United States than in Europe since the mid-1990s.

European countries have seen similar productivity acceleration in ICT producing sectors, but have failed to achieve the same levels of productivity growth in those sectors that use ICT intensively. The United Kingdom has done better than France or Germany in this respect, but not as well as the United States.

Labour productivity declined from 1980 to 2005 in half of the countries in Latin America. For example, in 2005, the comparative level of output per person employed in Venezuela was 42% of the United States level, almost half of what it was in 1980. In contrast, economies in Asia and the Pacific, although generally having lower labour productivity levels than Latin American countries, showed significantly better catch-up performance relative to the developed economies.

According to the ILO, productivity growth is fastest in China and other parts of East Asia. Output per worker has risen from one-eighth of the level of the industrialised countries in 1996 to one-fifth of that level in 2006.