Labour productivity in the total economy

Labour productivity is a measure of the efficiency of work done. For the economy as a whole, this is gross domestic product (in market prices) divided by labour volume. For the labour productivity of particular sectors, the gross value added in basic prices of the relevant sector is used instead of gross domestic product. The best measure of the volume of labour is the number of hours worked. If this is not available, the number of years worked or (least accurate) the number of persons employed can be used instead.

Labour productivity is an important economic indicator: rising labour productivity leads to more profitable firms and enhances the prosperity of the country where they are located. Labour productivity can be increased by making more use (or better use) of machinery, for instance. Some professions, such as that of barber or violinist, are intrinsically labour-intensive. This means there is little to be gained in terms of labour productivity. This accounts for a large degree of the differences in labour productivity between economic sectors.

Labour productivity can be determined both for the commercial sector and for the economy as a whole. The commercial sector comprises all economic sectors except government, education, households and the real estate activities sector. Productivity trends are more difficult to determine or interpret in these sectors. This article analyses economy-wide productivity for the purpose of international comparability.

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