Finland catching up with USA in productivity
From HELSINGIN SANOMAT
INTERNATIONAL EDITION - BUSINESS & FINANCE
The productivity of Finnish labour is among the best in Europe. According to the International Labour Organisation, Finland has managed to significantly improve its productivity, bringing it closer to that of the United States.
The high productivity figures in the USA are largely explained by long working days and short holidays.
Compared with the Americans, Finns work fairly short hours. According to a recently published report by the Union of Salaried Employees, a majority also appreciate the increase in time off. On the other hand, the ILO study indicates that the number of those working a long work week of 40 hours or more has increased in Finland as well.
In the view of Mika Maliranta, head of research at the Research Institute of the Finnish Economy (ETLA) the growth of productivity of Finnish labour is attributable to a transition into a true market economy, as well as greater use of information technology.
He notes that Finland has painstakingly implemented a successful technology and productivity policy, and that the level of education has also grown.
Taking a similar view is Professor Matti Pohjola at the Helsinki School of Economics and Business Administration.
"The change in the production structure, the shift to predominantly technological production: the impact of information technology devices on economic growth has been great. Much of the productivity has come from there", Pohjola says.
However, Pohjola points out that the growth in productivity has slowed down since the 1970s.
"When you're far behind the others, growth is based on copying what the others do, and growth is rapid. When you're near the top there isn't so much to copy any more and you should do it yourself. That is difficult", Pohjola says.
He adds that the share of industry in comparison with services remains much bigger than in many other Western countries.
"There is still much to copy. It would be important to get many other sectors into the growth trend."
According to ETLA's Maliranta, the maintenance of productivity will prove more difficult, because Finland is already near the very top, and that there is little left to catch up with. He says that Finland is running short on good labour, and new ideas are needed.
He feels that the most interesting productivity question will be what happens when the postwar baby boom generation drops out of the workforce.
The world's highest labour productivity rate is in the United States. Sub-Saharan Africa, meanwhile, has increased its status of bringing up the rear in labour efficiency.
When GDP in 2006 is divided by the number of people working, the Americans produce an average 63,885 dollars, or about EUR 46,900 worth of goods and services a year. Ireland, which is in second place, has the corresponding figure of about USD 56,000.
The Americans' advantage is attributable largely to the number of working hours. In 2006, US workers worked an average 1,804 hours in 2006, while in France, for instance, the average was 1,564 hours a year. In practice this is reflected in longer work weeks and in holidays that are much shorter than those for Europeans, the ILO reports.
Productivity per hour spent at work was the world's highest in Norway (38 dollars an hour) and second-highest in the USA (36.63 an hour).