Global Productivity Decline Continues at Slower Pace in 2013
2013 marked the third consecutive year of a global decline in productivity, according to a new report by the Conference Board.
However, the decline moderated significantly last year, as global labor productivity, measured as output per person employed, grew by 1.7% in 2013, down only 0.1% from the 1.8% growth in 2012. By comparison, 2012's figure marked a 0.8% decline from 2011's 2.6% growth rate, which itself was a 1.3% decline from the 3.9% rate of 2010. Since the emergence of large developing markets like India and China in the early 1990s, productivity growth has rarely fallen below 2%, with notable exceptions during the early and late 2000s recessions.
Conference Board Chief Economist Bart van Ark noted that the slowdown could be "largely due to the stabilization of productivity growth rates in mature economies," as growth in output per person employed in the US held steady at 0.9% in 2013 and output per hour grew only to 0.8% from 0.7% in 2012. In Europe, output per person employed jumped from 0.1% in 2012 to 0.5% in 2013, but fell on a per hour basis from 0.7% to 0.6%. Overall, productivity growth rates for most countries remained very low in 2013.
"Emerging markets, and especially China, account for the bulk of world's productivity growth," said Abdul Erumban, senior economist at the Conference Board and co-author of the report. "But the years of rapid, easy improvement appear to be over. Since these countries remain significantly less productive than mature economies in US dollar terms, the ongoing shift of economic activity away from the latter adds to the global productivity slowdown."
The report also includes a measure called total factor productivity, which accounts for productivity of labor and capital inputs in one measure. In 2013, this figure dropped below zero for the global economy. "This indicates stalling efficiency in the optimal allocation and use of resources," said Erumban. "While in part the result of slowing global demand in recent years, the drop in productive use of resources is also related to a combination of market rigidities and stagnating innovation in those economies."
- Jacob Barron, CICP, NACM staff writer