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Productivity & the Performance of the Jamaican Economy

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Dr Charles Douglas, Executive Director of the Jamaica Productivity Center, addresses the Jamaica Doctor Bird Chapter of the Project Management Institute, on the causes and possible solutions for chronic low productivity in Jamaica.

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Productivity & the Performance of the Jamaican Economy

  1. 1. Presenter: Charles Douglas, Ph.D. Executive Director Jamaica Productivity CentreAddress to the Project Management Institute – Doctor Bird Chapter Tuesday, February 8, 2011
  2. 2. Productivity can be defined as:A state of mind, an attitude that seeks thecontinuous improvement of what exists.It is a conviction that one can do better todaythan yesterday, and that tomorrow will be betterthan today.
  3. 3. A measure of how well resources are used(Efficiency) to produce goods and services thatmeet the needs, requirements and expectationsof the consumer (Effectiveness) Productivity is everybody’s business February 8, 2011 3
  4. 4. Growth Workers Government wages taxes Investors Financiers profit interest dividends Company depreciation retained earnings5
  5. 5. Improved Standard of Living Higher GDP › Higher Per Capita Income Contribution from higher productivity Contribution fromContribution from Higher Total Factor Employment ProductivityContribution from Quality of Higher Capital Quality of Capital & Intensity Workforce Systems Productivity is everybody’s business February 8, 2011 5
  6. 6.  Partial Factor Productivity (PFP) Or Single factor productivity express how efficiently an entity is utilizing a single input factor in the production of outputs (products or services). Example Labour, Capital, Materials, Energy, Service productivity. Output / Value Added Labour Pr oductivity  Total NumberEmployed Productivity is everybody’s business February 8, 2011 6
  7. 7.  Total factor Productivity (TFP)Measures the contribution to growth that isnot accounted for by capital and labour.It includes the impact of factors such asorganizational restructuring, technology,innovation, human resource development &training, infrastructure, etc.Over 70% of economic growth is due togrowth in TFP Productivity is everybody’s business February 8, 2011 7
  8. 8. 2007 (constant J$, 1996 Avg. Annual Growth 1998-COUNTRY & SECTORS = 100) 2007Jamaica 219,624 -0.7Manufacturing 454,578 2.0Electricity, Gas &Water 1,329,968 1.5Financing, Ins, Real Est. & 506,766 0.5Business ServicesMining & Quarrying 1,690,887 0.4Transport, Storage & 452,565 0.4CommunicationAgriculture, Forestry & Fishing 64,495 -1.8Wholesale, Retail, Hotels & 277,369 -1.4RestaurantsConstruction & Installation 225,477 -2.3 Source: Estimated by JPC using data from STATIN Productivity is everybody’s business February 8, 2011 8
  9. 9. Labour Productivity in Jamaica Output/Worker Output/Worker Avg. Growth 1998 2007 Output/Worker 1998-2007 Jamaica 9,862 9,158 -0.7 Trinidad 30,954 51,916 6.0 Barbados 19,394 20,830 0.8 St. Lucia 10,220 10,886 0.8 Source: ILO KILM 18 database, Groningen Growth and Development CentreJamaica Trails Most Caribbean Countries in Outputper Worker (1990 PPP$) Productivity is everybody’s business February 8, 2011 9
  10. 10.  Labour productivity growth of 1% per annum, it will take over 3 generations (72 years) for a Jamaican worker to be twice as rich as his/her fore parents. LP growth at 2% annually it takes 1½ generations (38 years). At 3% less than 1 generation (25 yrs). At 5% about ½ of a generation (13 yrs). Productivity is everybody’s business February 8, 2011 10
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  13. 13. Relative Productivity in Latin America, 2005) 40.0 Chile 35.0 Argentina 30.0TFP relative to United States (%) Mexico Brazil 25.0 Costa Rica Panama Uruguay 20.0 Colombia Dom Rep. Typical LAC Venezuela 15.0 Nicaragua Paraguay El Salvador Jamaica Bolivia 10.0 Ecuador Peru 5.0 Honduras 0.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 GDP/Capita relative to United Stated (%) 13
  14. 14. Synthesis Jamaica has been caught in a low growth low productivity trap This low-growth, low-productivity performance at the national and sector levels must be of great concern to workers, government, employers & trade unions - everybody This is because productivity is the most critical factor that determines the country’s competitiveness, as well as the standard of living of our people. Productivity is everybody’s business February 8, 2011 14
  15. 15. Tocarry out its mandate, JPC must partner with the widest number of stakeholders to assist in the process of building a productivity culture or movement.Economic growth and standard of living iscontingent on productivity improvementThe united efforts of all our citizens is required.It is therefore imperative that the productivitymessage is understood by everyone at every level. Productivity is everybody’s business February 8, 2011 15
  16. 16.  A Cultural Transformation Building a more productivity-sensitive culture Example: Introducing productivity-related courses in the curricula of secondary /tertiary educational institutions Enrichment of Labour/Management Relationship A shift from “Industrial Relations” type activities to “Labour Management Co-operation” type ones. Example: The increased use of productivity-linked schemes within business enterprises to remunerate and reward workers. Improved Training and Developmental Programs for Employees/Managers.
  17. 17.  Allocating resources to minimize or eliminate wastes (interest of PMI & JPC coincides) Require that projects are delivered on time, within budget and according to specification (interest of PMI & JPC coincides) Minimizing re-work is about implementing projects efficiently and effectively (interest of PMI & JPC coincides) Customer satisfaction – (interest of PMI and JPC coincides) More fundamentally, economic growth can only be sustained through productivity growth – (here the interest of all Jamaicans must coincide.) Productivity is everybody’s business February 8, 2011 17
  18. 18. Productivity is everybody’s business February 8, 2011 18

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