Labor Productivity: The Current State Of The Russian Federation
Экономика и управление
Журнал «Научный лидер» выпуск # 18 (20), июль ‘21
Дата публикации 02.07.2021
Labor productivity, T. K. Rutkauskas notes, is an economic category that characterizes the effectiveness and productivity of labor. Labor productivity as an economic indicator characterizes the number of products produced by an employee for a certain period of time . Meanwhile, there are a number of other scientists who have formulated the concept of labor productivity in a similar way. For example, S. G. Strumilin wrote that labor productivity "in the most general and at the same time precise sense of the word is determined by the amount of product created by a worker per unit of working time." G. S. Vitkovskaya proceeds from the characteristics of labor and notes that labor productivity is "... the fruitfulness of exclusively living (concrete labor) ... " V. I. Makarieva defines labor productivity as "... the efficiency of using the company's human resources and is determined by the number of products produced per unit of working time, or labor costs per unit of products produced or work performed".
Thus, in the course of labor activity, a certain product is formed. The quantity of such a product determines the effectiveness of labor. Here it is necessary to take into account the costs incurred in the production process, so the economy includes such a category as labor productivity, which is an indicator of the productivity of activity.
In Russia, the problem of achieving high labor productivity indicators is considered as a priority at all levels of management, since Russian goods would potentially not be able to compete on the world market . Nevertheless, the lack of information and the peculiarities of economic activity in Russia make it difficult to assess the real dynamics of labor productivity. For example, the involvement of hired employees in outsourcing, thanks to which enterprises increase intermediate consumption, reduce value added in order to pay less taxes, is reflected in statistics, and often regional indicators of production and labor costs do not correspond to each other. This problem was discussed at a meeting of the Scientific and methodological Council of Rosstat on July 1, 2019 .
Unfortunately, the economy of the Russian Federation has a very low level of labor productivity, which is several times inferior to the economy of advanced foreign countries.
Figure 1. GDP per hour of time worked in 2019, US dollars
As we can see, Russia is ahead of only South Africa, Mexico, Costa Rica and Bulgaria in terms of labor productivity in this group of countries and has secured 35th place at the level of 26 US dollars in the list of 39 countries. In this table, Ireland took the lead with an indicator of 103 US dollars.
In the ranking of the top countries in terms of labor productivity according to one of the ILO assessment methods based on estimates of GDP at constant prices in 2011 at purchasing power parity (PPP), Russia ranks 64th ($53.5) in 2019 .
Based on the data from the Total Economy Database (TED), it can be seen that Russia in 2019 is far behind in terms of labor productivity per employee (57,741 US dollars) . Here, it leaves behind many countries, including China, Argentina and Chile, but it is inferior to many others. The first place in this list is occupied by Luxembourg with a labor productivity level of $ 158,553.
In the Russian economy, there is a lower labor productivity compared to advanced foreign countries at the micro level: most of the main non - resource industries have no higher labor productivity, and in most cases, it is significantly lower than that of foreign competitors. It is important here that newly created firms and firms with the participation of foreign investors and owners, as well as investment-active firms, cope better with competition.
The highest indicator of labor productivity in the main non-resource sectors is shown by the manufacturing industry. Usually, leading companies and large firms are interested in increasing labor productivity, which leads to an increase in the level of intra-industry division of firms by the level of labor productivity. For example, pulp-producing firms are leaders in their industry in terms of average productivity and they are more than 8 times ahead of other firms in the industry and more than 6 times ahead in meat livestock, automotive and air transportation, flour and grain industries.
In the Russian economy, the issue of increasing labor productivity is quite acute and has a complex character. To solve it, comprehensive measures are required, since separately taken measures, including forcing firms to increase productivity, can lead to some results, but they will be fictitious and imitated, and some firms will be able to abuse their monopoly position altogether.
The Russian economy is also characterized by differences in labor productivity indicators both between industries and within each of them. As mentioned in the paragraphs above, in some industries there is a high degree of concentration and a negative tendency to stratification by the level of labor productivity. The results of scientists ' research suggest that the state's policy is mainly aimed at industry leaders. These are large, "open for investment" firms. State support for these firms creates conditions for an even greater increase in the gap between lagging firms and leading firms. This issue of supporting leading firms is controversial: on the one hand, to strengthen economic growth and demonstrate the effect, it would be reasonable to support the leaders, but new, recently "born" firms will show less and less a decent level of productivity, since they have nowhere to wait for help. Here, the effect of duration and duration may be low due to the fact that leaders improve their performance with the presence of support, and without it there will be no results. On the other hand, if you support outsiders, you should expect that the market will be crowded with low-performing firms that constantly use state support. In any case, leaders need tax measures to introduce the latest equipment and technologies, as well as state support for the introduction of digital technologies, and it is preferable for lagging firms to reduce administrative restrictions .
As noted earlier, firms with initially high labor productivity are interested in increasing it, and the same task is not important for outsiders. To do this, it is necessary to increase their motivation.
Scientists conducted an analysis that mentions the following factors for increasing labor productivity .
- Business digitalization, the use of advanced digital technologies and processes;
- Investment in advanced technologies;
- Investing in research and development;
- Export activities;
- Professional development of employees, development of human capital.
Studies also show that the lag of the Russian economy from the economies of advanced countries is due to the low level of use of equipment and technologies, capital-to-weight ratio. This is caused by insufficient financing of firms, the difficulty of raising funds.
Currently, one of the most important factors of high labor productivity is the digitalization of business. It contributes to the stable development of firms.
The Russian Federation lags behind the advanced countries in terms of digital transformation, positive aspects are created only by standard and economical solutions, such as cloud technologies and automated enterprise resource planning and management systems (ERP) . In this regard, a good solution would be the implementation of enterprise digitalization projects.
Some domestic scientists have assessed the impact of export activities of firms as one of the factors of labor productivity growth. Firms engaged in export are distinguished by a high level of labor productivity, unlike those that are engaged exclusively in import .
Tax incentive measures can ensure the mass involvement of firms in the process of increasing labor productivity. Along with these measures, one of the most important factors stimulating the introduction of advanced scientific achievements in the field of technical and technological innovations in the sectors of the economy of the Russian Federation is a demonstrative example of other firms. In this regard, it is very important to ensure the openness of the results when conducting state events on the introduction of advanced technologies. This will create a demo effect. Foreign government programs, as a rule, contribute to the growth of labor productivity by supporting the spread of low-cost innovations among small firms, and this experience should be taken as indicative.
We know that research and development are catalysts for the competitiveness of firms. Thus, the costs of firms for R & D and labor productivity growth are positively dependent indicators. However, R & D is effective under the condition of a high intensity of research and development costs, therefore, measures are needed to improve the intensity of these costs. The incentive for firms to conduct research and development is the requirements for technical regulations and standards. Such changes should be of a long-term nature.
Thus, the economy of the Russian Federation urgently needs to increase labor productivity, but there are nuances that complicate the work of the state apparatus in this regard. One of these nuances is that it is possible to support industries by encouraging both high-performing firms to improve their performance, and low-performing ones in order for the latter to overcome their crisis. However, by supporting the "strong", it is possible to leave the "weak" far beyond the line of stable and dynamic development, and by supporting the "weak", the state risks leaving the industry only with outsiders, who will soon turn out to be many.
The above problems are solved, of course, not immediately. This will require systematic measures in the field of economic and financial policy of the state:
- tax and financial incentives for leading firms to introduce and use new technologies and equipment;
- promoting the introduction and application of advanced methods and tools for organizing production and management, digitalization of business;
- export support;
- organization of mass involvement of firms in the process of increasing labor productivity;
- reduction of regulatory and legal restrictions;
- modernization of the corporate governance system to increase motivation to increase labor productivity;
- professional development of employees and retraining of personnel, development of the level of human capital.
Labor productivity is nothing more than the most important indicator that characterizes the economic efficiency of production, the level of development of equipment and technologies, the organization and management of production. The study examined various methods of measuring labor productivity, the main groups of factors affecting labor productivity and related groups of reserves allocated by some economic scientists, as well as the main ways to increase labor productivity. The analytical part of the work allowed us to draw the following conclusions on the state of the economy of the Russian Federation in terms of labor productivity:
First, the Russian economy lags far behind the advanced countries in terms of labor productivity. The study of factors and motives that hinder the increase of labor productivity at the level of firms has shown that the key factors affecting the dynamics of labor productivity are: the lack of personnel with the necessary qualifications, knowledge and experience of working with new equipment and equipment; the high rate of reserve wages of such specialists and so forth.
Secondly, in the Russian Federation there is a low motivation for research and development at enterprises that improve the conditions of both employees and firms that increase the level of labor productivity.
Thirdly, a significant part of firms in the Russian economy are not involved in the process of exporting goods, which, according to economic scientists, contributes to increasing labor productivity.
And finally, fourthly, a significant proportion of industries in the Russian Federation, we can say, are not interested in digitalizing their processes and solutions and introducing advanced scientific achievements, including stimulating their development: most firms prefer to stay in the comfort zone and not implement advanced business solutions, use cheap, ready-made solutions in the field of technical and technological support, in particular, software for information resources.
In connection with the listed problems and the facts mentioned in the work, the following recommendations were developed for the public sector on the issue of increasing labor productivity in the Russian Federation: tax incentives for the introduction and use of new technologies and equipment by companies and organizations; promotion of the introduction and application of advanced methods and tools for organizing production and management, as well as digitalization of business; support in finding ways to foreign markets; organization of mass involvement of firms in relevant processes; reduction of regulatory barriers; modernization of the corporate governance system due to the lack of motivation of many firms to increase labor productivity; professional development of employees and retraining of personnel, as well as the development of the level of human capital.
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