Productivity: An urgent matter of political concern?<\/p>\n
By Simon Potter<\/p>\n
JAKARTA (JP): In my home country, the United Kingdom, simply
\nmentioning the word \"productivity\" is enough to raise the hackles
\nof many individuals. The history of productivity in the UK is
\ninextricably bound up with that of the trade unions and their
\noften bitter labor disputes.<\/p>\n
Even today, many working men and women regard productivity
\nimprovement with suspicion. They think that it will take away
\ntheir jobs, or only be of benefit to the bosses, that it will
\nmean more work for less money, or that it will reduce job
\nsatisfaction. Still others believe that productivity belongs only
\non the shop floor and that it has no place in an office or in the
\nboardroom.<\/p>\n
The bitter experience of trying to improve productivity in
\nindustry in the 1970's and 1980's has meant that even today,
\nproductivity has many negative overtones in British society, and
\nefforts at improvement are often met stiff opposition.<\/p>\n
The situation in developing nations however, is somewhat
\ndifferent. In Indonesia for example, the main difficulty is lack
\nof information about the subject. Despite the efforts of bodies
\nsuch as the Indonesian Institute for Productivity, many decision
\nmakers are woefully ill-informed about productivity and how to
\nimprove it.<\/p>\n
Currently, productivity improvement cannot be described as a
\npriority, simply because Indonesia, with about a 7-percent
\neconomic growth rate over the past decade, is doing so well.<\/p>\n
But in the future, things are set to change. At present,
\nIndonesian goods are competitive on the world market primarily
\nbecause of cheap labor. Yet with the continuing development of
\nChina, Vietnam and others, Indonesia will see this competitive
\nadvantage wither away, and will need to be well-versed in
\nproductivity improvement techniques if it is to continue to
\ncompete.<\/p>\n
The Indonesian government has recognized the importance of
\nproductivity by making November of each year \"National Quality
\nand Productivity Month\", but there needs to be concerted effort
\nto disseminate information and train and educated people, if the
\ncountry's economic success is to continue.<\/p>\n
Countries which are currently leading the field economically,
\nhave usually placed a high priority on productivity. Japan for
\nexample, under the auspices of W. Edwards Deming, based its'
\nrecovery program after World War II on the twin principles of
\nquality and productivity, and as everyone knows, it has been
\nraping the benefits every since.<\/p>\n
For others, especially developing countries and those nations
\nwho have seen their competitiveness decline in recent years,
\nproductivity needs to become an urgent matter of political
\nconcern.<\/p>\n
More and more, analysts are identifying productivity as the
\nsingle most important progenitor of socio-economic growth.
\nWithout policies to actively encourage improvements in
\nproductivity, governments will increasingly face mounting
\ndifficulties.<\/p>\n
Take the U.S. as an example. Productivity needs to be
\ndramatically improved if the government is to cut the federal
\ndeficit which is currently running at some US$8,000 for each of
\nits' citizens, men, women and children. To make matters worse,
\nthe nations's infrastructure, so long deteriorating is requiring
\nmore and more funds to maintain and repair, and the population is
\naging fast. Currently 3.4 workers support each retired person.
\nThis figure could well drop to below two workers per retiree once
\nthe baby boomers start retiring around 2010. Pay awards in excess
\nof productivity improvements have not helped matters; on the
\ncontrary, they have contributed to greater inflation and
\nunemployment.<\/p>\n
If the U.S. does not find a way to alleviate this situation,
\nintolerable political pressures will build up.<\/p>\n
Traditionally, governments have sought a fiscal answer to such
\nproblems. But the U.S. government appears to have reached its
\ntaxing limit, and many businesses and industries seem to have
\nreached their tax paying limits. What is in fact needed is less
\nfiscal intervention and more incentives to increase and improve
\ngoods and services by improving productivity.<\/p>\n
The situations in the U.S. is more or less reflected in other
\ndeveloped nations, and as a consequence we will see productivity
\nmoving more and more to the top of the political agenda, as
\ntraditional methods for dealing with a nation's problems are
\nincreasingly seen to be ineffective.<\/p>\n
It is one thing however to decide that improvements in
\nproductivity ought to take place. It is quite another to realize
\nthem. Even with the best will in the world, most governments will
\nface innumerable difficulties in implementing productivity
\nprograms.<\/p>\n
There are two approaches available; at the macro and the micro
\nlevels.<\/p>\n
On the macro level, there is strong evidence that the
\nfollowing variables affect productivity: the changing composition
\nof the workforce, investments in human and physical resources,
\ntechnological advances and economies of scale. Governments need
\nto implement programs directed towards making full use of these
\nfactors in order to improve productivity. All such programs
\nshould be government by the following principles:<\/p>\n
1. Facilitate the transition from an agricultural economy to an
\nindustrial economy to an information economy.<\/p>\n
2. Facilitate the movement of women into the workforce.<\/p>\n
3. Provide education, training and re-training.<\/p>\n
4. Encourage the free movement of labor.<\/p>\n
5. Provide specific incentives for investment.<\/p>\n
6. Provide low-interest loans for small and medium sized businesses.<\/p>\n
7. Provide research and development funds to encourage innovation
\nand the development of new technology.<\/p>\n
8. Encourage the dissemination and application of new technology as
\nwidely as possible.<\/p>\n
9. Encourage mergers, consolidations and strategic alliances.<\/p>\n
10. Establish export assistance, especially for companies that
\nbenefit most from economies of scale.<\/p>\n
11. Aid economic restructuring to best benefit from the nation's
\ncomparative advantages.<\/p>\n
12. Create new jobs by improving competitive position and market
\nshare.<\/p>\n
Regardless of the type of economy, the basic problem remains
\nthe same: How to make the most of often limited resources. Many
\ngovernments however, often find it hard to think of their
\nprograms in such a way, and consequently have difficulty in
\nidentifying what it is exactly they wish to achieve, and then
\ndoing it.<\/p>\n
On the micro level, that is at the level of the firm, certain
\nbasic conditions must exist before a company can operate
\nproductively. There must be effective control of crime and
\ncorruption. A company cannot operate productively if it has to
\nbribe the police, the local government, the military, the
\nmanpower department and so on.<\/p>\n
There must also be minimal labor relations problems. A company
\ncannot function effectively if its staff are disaffected or
\nopenly hostile.<\/p>\n
There must be competent managers and dedicated employees and a
\nminimum amount of red tape and bureaucracy.<\/p>\n
Above all, for a program of productivity improvement to
\nsucceed, there must be a mood within the company which is
\nacceptable to change.<\/p>\n
Only when these conditions exist can a company begin to think
\nabout improving productivity. This can be done in a number of
\nways, ranging from top-down management directives, to bottom-up,
\ngrass-roots efforts. The guiding principle should always be how
\nto make them most from existing resources, be they capital,
\ntechnology or people. For many companies, its employees represent
\nthe biggest portion of its' underutilized resources. Among
\nmeasures to make better use of a company's people are:<\/p>\n
1. Make jobs more secure in order to encourage employee loyalty.<\/p>\n
2. Pay more to employees (without hurting competitiveness).<\/p>\n
3. Reduce job stress, improve job satisfaction.<\/p>\n
4. Promote an employee's sense of self-worth.<\/p>\n
5. Invest in training and education.<\/p>\n
Productivity permeates every aspect of our lives, at work at
\nschool and at play. The human urge to create, to produce, has
\nbeen recognized in the world of the arts for centuries, and has
\nbeen described as being inextricably bound to what human life
\nitself stands for.<\/p>\n
And in this era of globalization, productivity is more and
\nmore becoming, not simply one aspect of human existence, but an
\nincreasingly important economic and political priority.<\/p>\n
The writer works at the Lembaga Produktivitas Indonesia
\n(Indonesian Productivity Institute) in Jakarta.<\/p>",
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