Labor productivity in Costa Rica, understood as the contribution to production (GDP) for each hour worked in the country, is the lowest of 40 countries, according to the latest OECD report, published this week.
However, poor growth in labor productivity continues to distinguish the most advanced economies in the world and risks compromising improvements in living standards, according to the report.
Economist Melvin Garita explained that productivity is largely determined by the use of time and the skills and abilities of Costa Rican human capital, so more hours worked do not equal greater productivity.
The fourth industrial revolution is characterized by the need to generate constant innovation in all production processes, since that is the capacity that differentiates us from machines, which keeps us employable in the era of digitalization and virtualization. To generate that innovation, in addition to knowledge, and skills, it is necessary to have a clear and fresh mind, where the balance between personal and professional life comes into play,”
explained this economist.
Garita believes that to improve productivity in Costa Rica, we must work on these microeconomic aspects, in addition to other macro aspects, such as fiscal stability, investment in transport infrastructure, labor market flexibility, the opportunity and quality of education and public health, among many other aspects.
The OECD stated that the manufacturing sector was particularly affected by the deceleration in the growth of labor productivity, and although economic growth in many countries has generated an increase in employment, especially in Italy, Mexico, Spain, the United Kingdom and the United States, most of the new jobs are in activities with relatively lower productivity.
The higher number of low-productivity jobs has also depressed average wages throughout the economy as a whole.
Real wages (adjusted for inflation) decreased between 2010 and 2016 in Portugal, Spain and the United Kingdom. Although in some countries, such as Germany and the United States, real wages have begun to rise – albeit at a slow pace – in line with the growth in labor productivity in recent years, wages have continued to fall behind in many sectors.
The percentage of income from economic activity that goes to work through wages has decreased in most countries in recent years, but very visibly in Hungary, Ireland, Israel, Mexico, Poland and Portugal.
Additionally, in 2016, investment -an important factor in productivity growth- began to rebound. However, investment rates – especially in machinery and equipment and other tangible assets – were still lower than pre-crisis levels in many OECD countries.