Labour Productivity per hour Increases slightly to N730.85 in Q2’15; Representing 9.1% Growth

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Friday September 18, 2015 / 04.15pm /National Bureau of Statistics 
 

Introduction
Among the key measures of the wellbeing of an economy, is the level and growth of economic output, commonly known as the gross domestic product (GDP). However, economists and policy makers are also interested in the factors of production that are used in generating such output, as well as the level of efficiency associated with those inputs.
 

 

The productivityof inputs, for example, capital and labour, used in the production process remains an important indicator of the relationship between overall economic output and other aspects of the economy, such as the labour market, the money market, the capital market etc.
 

The productivity of inputs, or more technically, total factor productivity, refers to the amount of input required to produce a unit of output. It is typically computed as a ratio of output to the input utilised.
 

While the total factor productivity for an economy can be computed this way, this can often be a difficult task, and a more specific and commonly used measure of productivity is labour productivity.
 

Specifically, labour productivity refers to the quantity of labour input required to produce a unit of output. This is often the case, even though it is recognized that labour is NOT the only input utilised in the production process.
 

High labour productivity can be an important signal of the improvement in real incomes (wages of labour). It also has implications for the conduct of both monetary and fiscal policies.
 

It is recognised that labour productivity is not necessarily an indicator of the effort of each worker, but it still provides a useful measure of the rewards to labour as a factor in the production process.
 

In many developing economies with large endowments of labour, measuring the productivity of labour is an important way to understand the dynamics occurring in the labour market, and useful in providing insights to policymakers regarding trends in unemployment, job creation and wages.
 

Ultimately, these have implications for higher economic output and poverty reduction. In Nigeria, although economic growth has been high and stable in recent years, constraints on productivity of labour and other factor inputs continues to put a drag on overall economic growth.
 

Coupled with high unemployment rate, the Nigerian economy faces a considerable threat to realising its full growth potential due to productivity challenges.
 

The purpose of this brief report is to review recent trends in labour force and labour productivity in Nigeria, as well as compare with other emerging economies, with a view to highlighting possible areas of interest in the analysis of labour productivity in Nigeria.
 

This short report also forms a preparatory note for a forthcoming rigorous and detailed study on labour productivity in Nigeria by the National Bureau of Statistics.
 

1.     Data 
Data used for this report are from the National Bureau of Statistics Labour Force Surveys, as well as the OECD EuroStat database 1. For our purposes, labour productivity is derived as the ratio of total output (annual GDP, current prices) to labour input (total hours worked per year).


2.    Analysis
Table 1 shows the trend in total GDP, hours worked as well as the derived labour productivity for the period 2010 – 2014, while table 2 shows the same thing but for the review period of Q1 and Q2 2015. 

 

It can be seen that labour productivity rose only marginally from about N471 to between 2011 and 2014. In 2015, labour productivity has increased slightly to N730.83 in Q2 2015 from N669.57 in Q1 2015 representing a 9.1% increase.
 

With nominal GDP rising year on year by 5.17% (2.35% real GDP) and recording flat nominal growth of 0.09% on a quarter on quarter nominal basis by 0.09% (0.03% real GDP) in the presence of a reduction of number of hours worked in the quarter by 0.7%, labour productivity grew by 9.1%.
 

Accordingly, Nigerian workers produced almost the same level of nominal output in Q2 2015 as Q1 2015 but with working 0.7% less hours resulting in a 9% improvement in labour productivity.
 

Given seasonality and its effects in Nigeria on output and labour hours however, we are cautious not to draw causeeffect relationships and make other inferences from this rise in labour force productivity in Q2 2015 until full year 2015.
 

Table 1: Gross domestic product, labour force and labour productivity (20102014)

 
 

Table 2: Gross domestic product, labour force and labour productivity (Q1 and Q2 2015)

 

Click Here to Download Full Report
 

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