Centrale Bank van Curaçao en Sint Maarten Research Department Shekinah Dare … · Shekinah Dare...
Transcript of Centrale Bank van Curaçao en Sint Maarten Research Department Shekinah Dare … · Shekinah Dare...
Labor productivity as a driver of growth
Centrale Bank van Curaçao en Sint Maarten Research Department
Shekinah Dare March 23, 2018
Table of Contents
1. Introduction
2. Measuring labor productivity
3. Labor productivity as a driver of growth
4. Ways to improve labor productivity
5. Labor productivity in Curaçao
6. Curaçao’s productivity in an international perspective
7. Conclusion
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Introduction
Ethan Harris
Bank of America Merrill Lynch’s top global economist
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“High productivity growth means a strong potential or sustainable growth rate for the economy. It lowers unit labor costs, boosting profits, and helping contain price inflation. And productivity is the basis for longer-term improvements in standards of living.”
“High productivity growth means a strong potential or sustainable growth rate for the economy. It lowers unit labor costs, boosting profits, and helping contain price inflation. And productivity is the basis for longer-term improvements in standards of living.”
Measuring labor productivity
GDP/GVA per capita
GDP/GVA per worker
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GDP/GVA per hour
Labor productivity as a driver of growth
4 Economic growth
Government:
-Tax revenues
Consumers:
-Wages
-Jobs
Businesses:
-Profits
-Investments
5 Economic growth
Ways to improve labor productivity
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Organization
-specific
Business & policy environment
Global factors
Organization
-specific
Business & policy environment
Global factors
Labor productivity in Curaçao
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Research conducted by the CBCS (updated by March 2018)
Measuring labor productivity in Curaçao
Contribution of labor productivity and employment/hours to growth Decomposition labor productivity growth
-Have sectors become more or less productive?
-Have employment shares shifted to more or less productive
sectors?
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Labor productivity in Curaçao
Data from the Central Bureau of Statistics
Three 5-year periods during 2004-2016
GDP/GVA at constant prices (2000 = 100)
2010/2012: linear interpolation for # workers and hours
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Labor productivity in Curaçao
No significant differences between the two methods…
9 4 9 -8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Change in GDP per hour
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Change in GDP per hour
Change in GDP per worker
Average change in GDP per hour (GDP per worker): -1.1% (-1.3%)
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Change in GDP per hour
Change in GDP per worker
Real GDP growth
Average change in GDP per hour (GDP per worker): -1.1% (-1.3%)
-3
-2
-1
0
1
2
3
4
2004-2008 2008-2012 2012-2016
Employment growth
Labor productivity growth
GDP growth
-3
-2
-1
0
1
2
3
4
2004-2008 2008-2012 2012-2016
Employment growth
Labor productivity growth
GVA growth
Labor productivity in Curaçao
…Negative contribution of labor productivity
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where Labor productivity is measured as GDP/GVA per worker/hour GDP/GVA growth is the sum of employment/hours growth and GDP/GVA per worker/hour Similar to the Conference Board, the variables are measured in log differences.
-3
-2
-1
0
1
2
3
4
2004-2008 2008-2012 2012-2016
Hours growth
Labor productivity growth
GDP growth
-3
-2
-1
0
1
2
3
4
2004-2008 2008-2012 2012-2016
Hours growth
Labor productivity growth
GVA growth
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Labor productivity in Curaçao
𝑃𝑡−𝑃𝑡−1
𝑃𝑡−1=
𝑃𝑖𝑡−𝑃𝑖𝑡−1
𝑃𝑖𝑡−1𝑥𝑌𝑖𝑡−1
𝑌𝑡−1
𝑛𝑖=1
+ 𝑃𝑖𝑡−1
𝑃𝑡−1𝑥
𝐿𝑖𝑡
𝐿𝑡−𝐿𝑖𝑡−1
𝐿𝑡−1
𝑛𝑖=1
+ 𝑃𝑖𝑡−𝑃𝑖𝑡−1
𝑃𝑡−1𝑥
𝐿𝑖𝑡
𝐿𝑡−𝐿𝑖𝑡−1
𝐿𝑡−1
𝑛𝑖=1
(Within effect)
(Static shift effect)
(Dynamic shift effect)
(Overall labor productivity growth)
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where 𝑃𝑡 is the productivity level of Curaçao in period 𝑡;
𝑌𝑡 = 𝑌𝑖𝑡𝑛𝑖=1 is the total value added of Curaçao in period 𝑡;
𝐿𝑡 = 𝐿𝑖𝑡𝑛𝑖=1 is the total employment of Curaçao in period 𝑡; and
𝑖 = 1,… , 𝑛 is the 𝑖𝑡ℎ economic sector of Curaçao
Labor productivity in Curaçao
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-3
-2
-1
0
1
2004-2008 2008-2012 2012-2016
Within effect
Static shift effect
Dynamic shift effect
Labor productivity growth
- Within effect
- Dynamic shift effect
+ Static shift effect
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Labor productivity in Curaçao
13 12 13 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0
Agriculture, fishery, and mining
Manufacturing
Utilities
Construction
Wholesale and retail trade
Hotels and restaurants
Transportation, storage, and communication
Financial intermediation
Real estate, renting, and business activities
Public administration and defense
Education
Health and social work
Private households
Other services
Percentage point contribution to productivity growth
-1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0
Agriculture, fishery, and mining
Manufacturing
Utilities
Construction
Wholesale and retail trade
Hotels and restaurants
Transportation, storage, and communication
Financial intermediation
Real estate, renting, and business activities
Public administration and defense
Education
Health and social work
Private households
Other services
Percentage point contribution to productivity growth
2012-2016
12
3
4
5
6
7
8
9
10
11
12
13
14
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0 10 20 30 40 50 60 70 80 90 100 110 120
Pe
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Average productivity level at constant prices, in thousand NAf. (2000=100)
Agriculture, fishery, and mining (1)
Manufacturing (2)
Utilities (3)
Construction (4)
Wholesale and retail trade (5)
Hotels and restaurants (6)
Transportation, storage, and communication (7)
Financial intermediation (8)
Real estate, renting, and business activities (9)
Public administration and defense (10)
Education (11)
Health and social work (12)
Private households (13)
Other services (14)
Aggregate average productivity level
Labor productivity in Curaçao
14 4 13 14
1
2
3
5
6
7
8
9
10
11
12
13
14
-0.4
-0.2
0.0
0.2
0.4
-25% -15% -5% 5% 15% 25% 35% 45%
Pe
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Average productivity growth, in %
Agriculture, fishery, and mining (1)
Manufacturing (2)
Utilities (3)
Construction (4)
Wholesale and retail trade (5)
Hotels and restaurants (6)
Transportation, storage, and communication (7)
Financial intermediation (8)
Real estate, renting, and business activities (9)
Public administration and defense (10)
Education (11)
Health and social work (12)
Private households (13)
Other services (14)
Aggregate average productivity growth
Labor productivity in Curaçao
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Labor productivity in Curaçao
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Static: financial intermediation, manufacturing, and real estate, renting, and business activities sectors
Dynamic: manufacturing sector
Tourism sector
Below-average productivity levels in all periods
Below-average growth rate (negative) in the last period
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Research conducted by the CBCS (forthcoming)
Curaçao’s labor productivity performance in a Latin American
and Caribbean context
Curaçao’s labor productivity in an international perspective
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Data from the Central Bureau of Statistics and World Bank
Sample period: 1999-2016
Hours data for Curaçao start from 2002
GDP at constant prices (2010 = 100)
2010/2012: linear interpolation of # workers and hours
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Curaçao’s labor productivity in an international perspective
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GDP per worker GDP per capita GDP per hour
Netherlands 0.5% 0.8% 0.6%
United States 0.9% 0.6% 0.9%
Argentina 0.9% 1.7 % 1.0%
Brazil 0.6% 1.3% 1.0%
Chile 1 .3% 2.7 % 2.0%
Colombia 1.6% 3.1% 2.1%
Costa Rica 1.2% 3.0% 1.6%
Ecuador 1.8% 1.9% 2.6%
Mexico 0.1% 1.1% 0.4%
Peru 3.5% 4.6% 3.9%
Uruguay 2.7 % 4.1% 3.1%
Barbados 1.3% 0.3% 1.7 %
Jamaica -0.4% -0.5% 0.0%
St. Lucia 0.9% 1.3% 1.3%
Trinidad & Tobago 1.2% 2.0% 1.6%
Curaçao -1.8% -0.9% -1.9%
Caribbean
Latin Am erica
Key trading partners
2011-2016
GDP per worker GDP per capita GDP per hour
Netherlands 0.8% 0.6% 0.8%
United States 0.7 % 1.3% 0.3%
Argentina -0.2% -0.1% -0.2%
Brazil -0.9% -0.5% -0.5%
Chile 1 .4% 2.6% 2.1%
Colombia 1.5% 3.0% 2.0%
Costa Rica 0.6% 2.7 % 1.4%
Ecuador 1.0% 2.0% 1.6%
Mexico 1.0% 1.5% 1.0%
Peru 2.9% 3.6% 3.3%
Uruguay 2.4% 2.8% 2.8%
Barbados 0.9% 0.3% 1.2%
Jamaica -0.3% 0.1% 0.0%
St. Lucia -0.2% 0.5% 0.2%
Trinidad & Tobago -0.9% 0.2% -0.5%
Curaçao -1.4% -1.4% -1.1%
Latin Am erica
Caribbean
Key trading partners
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Curaçao’s labor productivity in an international perspective
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Trend productivity growth has remained negative…
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-4%
-2%
0%
2%
4%
6%
8%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Barbados
Caribbean
Curaçao
Jamaica
Latin America
St. Lucia
Trinidad and Tobago
BP filter
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Barbados
Caribbean
Curaçao
Jamaica
Latin America
St. Lucia
Trinidad and Tobago
HP filter
Curaçao’s labor productivity in an international perspective
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Conclusion
What have we seen so far?
Labor productivity is a key driver of economic growth!
However, Curaçao’s labor productivity:
…has been declining for years
…contributed negatively to economic growth
…showed a shift from more productive to less productive sectors
What is next?
Focus on improving labor productivity to generate economic growth
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Thank you for your attention!
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