Higher labor productivity in 2021
Labor productivity is measured as gross value added per hour worked. In the long term, productivity growth is the main source of economic growth in advanced economies. In 2021, the gross value added of the market sector increased by 6.1%, while the number of hours worked increased by 3.1%. These factors combined led to strong labor productivity growth (2.8%). The market sector includes all industries except public administration, education and real estate trading, including owner-occupied dwellings. It accounted for 80% of total gross value added in 2021.
Positive contributions from most industries
Most industries contributed positively to labor productivity growth in 2021. However, contributions from agriculture, mining and quarrying, energy, water, and construction and information , communication and financial services were slightly negative.
The chart below shows the contribution of each industry to labor productivity growth in the business sector as a whole. The sum of these individual industrial balances gives an overall growth rate of 2.8% for the market sector as a whole.
Contributions to labor productivity growth were strongest in health care and manufacturing. Both industries had a minor negative contribution to labor productivity growth, coupled with a strong contribution from labor productivity within the industries themselves. When an industry is more productive on average than other industries and its share in the total number of hours worked increases, this translates into a positive contribution of changes. When its share in the total number of hours worked decreases, this results in a negative lag contribution. These relationships are reversed for less productive industries on average.
Contributions to labor productivity were also positive in trade, transport and business services. The growth of these industries was almost entirely the result of strong labor productivity growth within the industries themselves. Accommodation and food services, culture and recreation and other services also contributed positively to labor productivity growth. Since this industry is less productive on average and its share of total hours worked has increased, there has been a slight negative effect from the contribution of shifts.
Finally, a slight negative contribution to productivity growth was observed in agriculture, mining, energy, water and construction, as well as in information, communication and financial services. In both cases, this was primarily the result of negative labor productivity growth within the industries themselves.
other business services, other services
|Information and communication, financial services||-0.06||0|
|Agriculture, mining and quarrying, energy, water and construction||-0.1||0.01|
Productivity growth mainly due to higher multifactor productivity
Labor productivity growth in 2021 was mainly the result of a strong increase in multifactor productivity. Multifactor productivity is the part of the growth in value added that cannot be attributed to the growth of either labor or capital. In 2021, the contribution of multifactor productivity to labor productivity growth was 2.9%. This figure is strongly influenced by the fact that capacity utilization rates have increased in 2021, after falling sharply in 2020. The effect of these rising rates is reflected in a strong increase in multifactor productivity.
In addition, there was a positive contribution due to the change in labor composition (0.2%), but a negative contribution from capital (-0.3%). Despite the fact that more capital, such as machinery and computers, was used in the production process, the labor input grew at a faster rate, resulting in a negative intensification of capital per hour worked. The deployment of more skilled workers has had a positive effect on labor productivity growth.