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Productivity Measures

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Istat releases productivity statistics for the period 1995-2016. The productivity series are coherent with the results of the latest release of national accounts.

The adopted methodology closely follows the approach outlined in the OECD Manual on Productivity Measurement. Productivity is defined as the ratio of a volume measure of output to a volume measure of input. Both single factor productivity measures (relating a measure of output to a single measure of input) and multifactor productivity measures (relating a measure of output to a bundle of inputs) are estimated.

Output is the chain linked valued added at basic prices. Labour input is measured as total hours worked by all persons engaged in production (both employees and self-employed). Capital input is measured as the volume of capital services provided by the stocks of three categories of ICT assets (hardware, communication equipment and computer software), eight categories of tangible non-ICT assets (non-ICT machinery and equipment, furniture, road transport equipment, other transport equipment, livestock, tree and plant resources, construction works, and costs of ownership transfer) and three categories of intangible non-ICT assets (research and development, entertainment, artistic and literary originals, and mineral explorations). Productivity measures are estimated using national accounts data released in accordance with NACE Rev.2 classification. Estimates are provided for 38 industries (and their aggregation in 21, 10 and 3), as well as for the total economy. Both industry level and aggregate estimates are calculated net of real estate activities, of activities of households, of activities of extraterritorial organizations and of all activities of the General government sector. In the benchmark year 2011 the total of the above defined sectors accounted for 70.4% of total value added and 83.0% of total hours worked.

Labour productivity in the measured sectors fell by 1.0% in 2016, as value added increased by 0.9% and hours worked increased by 1.9%. In the same year capital productivity rose by 1.0%, as capital input fell by 0.1%, and multifactor productivity decreased by 0.4%.

The decrease in labour productivity in 2016 was accounted for by a fall in capital deepening (i.e. a reduction of capital input relative to labour input) which contributed -0.6 percentage points, with total factor productivity accountingfor -0.4 percentage points.

Over the entire period 1995-2016, the average annual growth rate in value added was 0.6%. Labour productivity rose by 0.3% due to labour input (0.3%) increasing by less than the growth in value added. In the same period capital input (+1.4%) and the combined inputs of capital and labour (0.7%) rose more than value added and both capital productivity and total factor productivity fell (respectively -0.8% and

The growth in labour productivity in 1995-2016 was driven only by capital deepening, which contributed +0.4 percentage points, with total factor productivity contributing for -0.1 percentage points. Tangible non-ICT capital contributed 0.2 percentage points, while  ICT capital (i.e computer hardware, communications equipment and computer software)  contributed 0.1 percentage points.

Over the last cycle (2009-2014) value added decreased by 0.3% on average. Labour productivity, capital productivity and total factor productivity all rose (respectively by 1.0%, 0.3% and 0.8%) due to hours worked, capital input and the  combined inputs of capital and labour all decreasing more than value added (respectively -1.3%, -0.6% and -1.1%).

The growth in labour productivity in 2009-2014 was mainly driven by total factor productivity, which contributed 0.8 percentage points, with capital deepening contributing for 0.2 percentage points.

Carmine Fimiani
Ph: +390646733196
Email: fimiani@istat.it

Reference period: Years 1995-2016

Date of Issue: 15 November 2017



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