Productivity, labour efficiency and growth

Abstract

With full employment an accepted fact of economic life, there has been a continuously increasing emphasis on raising output per man-hour, more commonly referred to as labour efficiency. However desirable it may be to raise the efficiency of labour in the short run, it may well be a less appropriate policy over the longer period. The present article reviews some of the disadvantages of the numerous attempts to raise labour efficiency. Specifically, the author argues that emphasis on raising utilisation productivity by obtaining a better adaptation of labour to existing plant is less desirable than concentration upon improving scale productivity through innovation to economize all factors per unit of output. Using the available evidence, the analysis is applied to the British economy. Both the problems of innovation and of machinery and technical development, in particular the machine tool trade, are analysed.

JEL: J24, O31, O52