Labour productivity: Is the such a measure? (The case of greek industry)

Even when concentrating on the simplest of partial productivity measures, the productivity of labour, the analyst is faced with a wide choice of alternative definitions and calculation possibilities. Some of them require a limited amount of data, can be implemented straightaway and are therefore used as up-to-date indicators of labour productivity trends. Others can only be implemented at a later stage, when the necessary data become available; their historical value is often considered of insufficient interest to justify the effort involved in their evaluation. This paper sets out to investigate the sensitivity of labour productivity measures to issues of definition and measurement through implementation to sectors of Greek industry. A number of alternatives were tried (many more were not pursued due to data unavailability) and some of the results obtained are presented. The findings seem to point to two conclusions: (a) The easy-to-calculate, up-to-date measure may well not reflect actual labour productivity changes; the dangers that this entails for the success or otherwise of productivity-linked payment schemes, performance evaluation and decision making are obvious. (b) It would appear possible to verify almost any a priori assessment of labour productivity growth rates by simply choosing the appropriate definition, method of measurement and industry stratum.