The Conference Board reports in its “2023 Global Productivity Roundup” that steady productivity growth has become a stubborn feature of the global economy for years, after picking up at the start of the pandemic in 2020.
Labor productivity measures the efficiency of people in a country or organization. To calculate this, you need to divide the total value of goods and services produced by the total number of hours worked.
According to the report, GDP per hour worked, a standard definition of labor productivity, will grow by only +1.2% globally in 2023. % growth in 2020 or an average annual productivity growth of +2.6% over the period 2011-2019.
The Conference Board noted that labor productivity growth in mature economies fell modestly (-0.1%) in 2022 and is projected to rebound modestly to +0.4% in 2023: “This is ahead of an average productivity growth of +1.0%.” %” during the period 2011-2019.
The information suggests that much of the weakness in 2022 and 2023 is concentrated in economies with rising labor demand, led by the United States and France.
In the US, GDP per hour worked is projected to fall by -0.7% in 2023 after declining by -1.1% last year. However, US labor productivity remains about 4% above pre-pandemic levels (i.e. 2019) due to extremely strong growth in 2020. Experience low productivity. A contraction of only -0.2% in 2023.
“While a return to modest labor productivity growth is expected in 2023, the trend remains disappointing, posing serious long-term headwinds for the global economy,” said Claes de Vries, senior economist at the Conference Board.
“Today’s historically tight labor markets anticipate a future in which demographic aging will increasingly constrain labor supply growth. Without sustained increases in labor productivity, economies will face a hard cap on growth that will affect all firms, even the most productive, in the future. Given this dynamic, companies will look to digital transformation and automation to help increase productivity.”