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In 2015, global GDP was about $74 trillion, according to PwC. By 2030, it will grow by about $15.7 trillion, of which $6.6 trillion will come from increased productivity through automation and artificial intelligence. The rest of the growth will come from changing consumer demand: shoppers will consume more personalized and high-quality goods. It turns out that labor productivity and its increase is the key to economic growth and prosperity.

This is the volume of output produced by one worker per unit of time. The scientific community looks at this indicator more broadly - it is the amount of goods produced by a person per unit of time, and their cost.

The higher the level of productivity, the higher the real GDP. And the higher the GDP – the volume of goods and services in the country – the higher the level of well-being.

Traditionally, labor productivity is measured as the volume of GDP per employee or per hours worked, according to the International Labor Organization. GDP is divided by the number of employees or by hours worked.

Rosstat has its own methodology. To calculate how labor productivity is changing in the economy as a whole, the agency divides the volume of GDP (in monetary terms) by the index of changes in labor costs. The latter takes into account the number of jobs, average hours worked, and labor costs.

Can such calculations give a complete picture? Experts try to cover all types of economic activity, but it is quite difficult to assess the gray and black labor markets. Sometimes informal activities are not included in the statistics at all. Data on the self-employed or those who work for relatives without pay or, for example, are engaged in seasonal work, are probably less reliable. The same applies to estimates of working hours: the actual hours worked are not always equal to the actual hours paid. Finally, such calculations are a very rough and conditional indicator; they cannot be used to draw conclusions about the level of technological development of a particular country.

A much better indicator for assessing the efficiency of economies is the total factor productivity (TFP) indicator, says Rostislav Kapelyushnikov, deputy director of the Center for Labor Studies at the Higher School of Economics (see his interview on page 08 for more details). This indicator demonstrates how much better our current ideas – technologies, organizational and management practices – are than those of yesterday.

Andrey Movchan, head of the economics program at the Carnegie Moscow Center:

Labor productivity is a very controversial indicator. There are dozens of methods for calculating it: most often it is estimated as the volume of GDP per working person (for example, this is how productivity is calculated in McKinsey studies and in OECD reports). But this is an imperfect method: approximately 30% of Russian GDP comes from mineral resources, where the contribution of labor is very small, i.e. this does not reflect labor productivity. Therefore, in a labor-intensive business, labor productivity according to this method will be obviously low.

What is TFP? This is the part of the increase in output that cannot be explained by an increase in costs. When measuring it, for example, the level of education of workers is taken into account (an increase in the level of education means an improvement in the quality of the workforce). TFP takes into account how modern the equipment that the worker has is, etc. In addition, the indicator also takes into account the factor of resource reallocation, primarily labor.

The Organization for Economic Cooperation and Development (OECD) carries out similar calculations – it calculates for its countries (the organization includes 35 countries) an index of changes in multifactor productivity, which takes into account, for example, management practices, and the level of education, and competition.

"We are using statistical methods invented 100 years ago for a new economic situation," says Vitaly Kazakov, director of the Energy Economics program at the Russian School of Economics. The economy is changing. And there is a question of whether traditional macroeconomic statistics accurately reflect the real rates of economic growth or decline and, accordingly, labor productivity, he says. It is possible that they overestimate the real decline of the economy and, accordingly, data on labor productivity.

"In the technological age, the connection between the cost of comparable goods and services in the past and present is more difficult to trace. For example, in recent years, the market for GPS navigators for cars has shrunk to almost zero. How does this reflect statistics - as a decline in the market for navigators and a negative impact on the real economy. But is this really so?" Kazakov gives an example. If we consider that the function of a navigator is now performed by smartphones, in which the cost of the navigation service is almost zero, then the actual decline in the market for GPS navigators is in fact an indicator of a decrease in cost. While the actual production of the service has increased many times over. Traditional macroeconomic statistics underestimate technological deflation, and therefore underestimate the real growth of the economy, he believes.

With the participation of Anastasia Stogney

Text: Anna Alexandrova

How to calculate labor productivity