The Importance Of Productivity Improvement

Depending on whom you are and what your role is within society, the idea of productivity will always be different from that of your neighbour.  Most business people see productivity as referring to ‘output per worker’, whilst others take a more philosophical point of view. However the truth is, productivity is a fusion of all of these ideas, as the concept can be put to work in different ways. Another way of viewing productivity is in the same way that The National Competitiveness and Productivity Council (NCPC) of St. Lucia would, and that is on a national scale. From this stand point; productivity is about creating more from the available resources present within any nation. These resources could include equipment, capital (assets, money, investment) and labour.  In other words, improved productivity is seen by the NCPC as being the culmination of different resources to produce goods and services that others (whether locally, regionally or internationally) would want to purchase.

So why does productivity matter and why must it be improved? Simply put, productivity is the mechanism through which all societies’ progress.  A country that has a higher productivity output has more national wellbeing options to choose from. National wellbeing including things like quality healthcare, education, increased income, lower prices, better roads and infrastructure and improved living standards

It must be understood however, that improving national productivity depends heavily on any given nation’s circumstances. Factors such as natural resources, their location, their institutional history and their culture must be taken into consideration. So saying, there will always be different strategies to be implemented to aid countries in improving their productivity. Yet, there still remain certain key factors that play an important role in any country’s productivity performance. These include:

  • Open competitive markets for trade of goods and services both domestically and internationally, and an ability to take advantage from trade;
  • A high quality low cost regulatory environment;
  • Improvements in human skills through well directed public and private investment in quality education;
  • Respect for the law and property rights, as well as the enforcement of contracts and low levels of corruption; and
  • The ease and attractiveness of doing business, recognising the important role of business in creating a high-performing economy.

Therefore being knowledgeable about the issues that affect productivity is important for any nation.  There are many conditions that will have to be considered and a lot of research will have to be done before any specific direction can be taken.  Undertaking productivity improvement requires patience and perseverance.  It must be noted, however that even small increases in productivity growth, if sustained, can have a big impact on income and welfare.