New UN report underscores ties between poverty and productivity

4 September 2007

A new report by the United Nations International Labour Organization (ILO) released today highlights the linkage between poverty and labour productivity, noting that limited investment in training and skills is diminishing opportunities to lift people out of poverty.

“Productivity is the cornerstone for poverty alleviation,” Lawrence Jeff Johnson, ILO’s Chief of the Employment Trends Team, said at a press briefing at UN Headquarters in New York today of the report, entitled “Key Indicators of the Labour Market,” also underscored the linkage between poverty and productivity.

Although productivity in East Asia has doubled in the last 10 years, the United States remains the global leader by a considerable amount in terms of labour productivity per person employed in 2006, the report noted.

South Asia, Central and South-Eastern Europe (non-European Union countries) and the Commonwealth of Independent States have all seen their productivity rise in recent years.

In South and East Asia, Mr. Johnson pointed out that the ILO has seen a marked decrease in the “working poor,” which he defined as “those individuals that are working but are unable to earn at least $2 a day for themselves and for their families.”

However, the situation is different in sub-Saharan Africa, where there has been only “moderate” growth in productivity, he said. “The only asset the poor have is often their labour. And if we are to reduce poverty, we need to improve productivity,” Mr. Johnson said, adding that bolstering skills and labour could play a key role.

The report also said that the productivity gap between the industrialized region and most others remains wide, even as productivity levels have been on the rise over the past decade worldwide.

In an ILO press release, the agency stated that an increase in productivity is largely due to firms better utilizing capital, labour and technology, and thus limited investment in training and skills, equipment and technology could lead to an underutilization of the world’s labour potential.

“The huge gap in productivity and wealth is cause for great concern,” said Juan Somavia, ILO Director-General. “Raising the productivity levels of workers on the lowest incomes in the poorest countries is the key to reducing the enormous decent work deficits in the world.”

The report found the US has increased its productivity growth over most other developed economies, with $63,885 of value added per person employed in 2006, followed by Ireland ($55,986), Luxembourg ($55,641) and Belgium ($55,235).

But the report stated that Americans work more hours per year than workers in most other nations with developed economies, and thus Norway has the highest labour productivity level when measured as value added per hour worked.

 

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