Industry and labor productivity

Industrial enterprises’ labor productivity measurements in Q1 2014 have nearly regained the absolute peak value over six years of monitoring of this indicator.


Today, 68% of enterprises consider “normal” their labor productivity. Only 29% of enterprises reported early in 2014 that their labor productivity was inadequate (“below normal”). However, as a reminder, it is enterprises themselves that performed the measurement, not government agencies. The latter consider that labor productivity in the Russian economy is extremely low and argue that enhancing the same is a recovery factor.


However, a great number of industrial enterprises are reluctant to support this doctrine, even in their plans. In Q1 2014, only 20% of enterprises were reportedly ready to improve their labor productivity, whereas 73% of them reported that their labor productivity wouldn’t change, and 5% reported that it would decline. The balance of the plans is therefore positive but most likely unsatisfactory for public authorities and experts.


Besides improved labor productivity, government officials and experts want to see labor productivity growth outstrip growth in wages. Only 22% of enterprises have plans to achieve this ratio of proposed changes to these two key indicators, whereas most (72%) of the manufacturers expect changes to labor productivity and wages to be equal.


Sergei Tsukhlo, Phd in Economics, Head of Gaidar Institute’s Business Surveys Laboratory