Using National Accounts Data for Productivity Analysis

1. Using National Accounts Data for Productivity Analysis François Lequiller OECD

2. Objectives of the paper • Promote the use of national accounts data on labour input for productivity analysis • The paper • makes several recommendations regarding the transmission of data to OECD/Eurostat • Proposes a model questionnaire on the bridge table between labor force statistics and national accounts data on employment

3. Productivity comparisons in the OECD • To compare productivity growth is easier than to compare productivity levels (PPPs…) • However, international users want to compare levels • Example: EU countries have set benchmark to the US in terms of levels (Lisbon objectives) • Canada and US productivities are compared in levels • OECD disseminates data on productivity levels

5. Decomposition of GDP per capita • GDP/Population = (GDP/total hours worked) * (total hours worked/persons employed) * (persons employed/labour force) * (labour force/working age population) * (working age population/population) • Definition of labour productivity = GDP/total hours worked, in preference to GDP/persons employed • Reason: total hours worked vary a lot between OECD countries

6. Limitations to GDP/total hours worked • Does not take into account differences in the composition of the work force • Difficulty to measure the non market sector • UK Atkinson report • Productivity of business sector better measured • But current limitation of the international data available on business sector

7. Use of national accounts data • The numerator of labour productivity is GDP • It is natural that the denominator, the measure of labour input, is consistent with numerator • Recommendation 1: national accounts data should be used to compile the denominator of labour productivity • Recommendation 2: standard national accounts tables should allow for the calculation of the productivity of the non farm market sector • Market = Total – NPISH – General Government – Owner occupied housing

8. Conditions to use national accounts data • First condition: total hours data in the framework of national accounts should be compiled by countries and transmitted to the OECD • Second condition: they should be comprehensive and consistent with GDP (coverage of self-employed, underground economy, domestic concept) • Third condition: they should be comparable between countries

9. Availability of national accounts data • See Table 2, page 6 • Most OECD countries transmit data on employment • However, some transmit numbers in terms of jobs, while the majority transmits data in terms of persons • Only very few countries transmit data on total hours • Some transmit data on total hours for employees but not for self-employed

10. Improve international availability of data on total hours • Recommendation 3: OECD countries should report systematically total hours for employees and self-employed • The concept of full-time equivalent is being abandonned • Recommendation 4: SNA should be clarified to avoid excluding the concept of « persons ». ESA could be used as an input to precise what is in or out of labor input. • Paris Group (labour force statistics experts) are discussing of a new ILO resolution on working time measurement. Could lead to some precisions in the SNA paragraphs that refer to the old resolution. • Recommendation 5: OECD countries should report data in terms of persons as well as in terms of jobs.

11. Comparability with labour force statistics • See table 3, page 9 (employment) • See table 4, page 10 (hours worked) • Significant differences with original source • Some differences can be explained • Example: US: jobs (NIPA, from CES) versus persons (CPS) • Example: Italy: partially underground economy • More information is needed to better understand and to check that national accounts adjustments are comparable

12. From a pilot test to a questionnaire • Objective: better understand the bridge table between original labour force sources and national accounts data • France and Canada have accepted to describe this bridge table • Based on this experience, Eurostat and OECD propose a questionnaire quantifying the adjustments made • The two pilot countries are illustrative: • France: uses mainly Census, administrative data and business surveys and introduces corresponding adjustments • Canada: uses mainly LFS, and introduces corresponding adjustments

13. OECD/Eurostat questionnaire • Objective: explain and quantify the differences between the main labor force statistics and the NA estimates • Start from the labour force statistics • For persons/jobs • For hours worked • Quantify each adjustment

14. OECD/Eurostat questionnaire • Quantify adjustments for employment • From stocks to flows (averaging) • From persons/jobs to persons/jobs • Adjustments for coverage • Military • Other collective households • Territories • Residents working outside (-) • Non residents working inside (+) • Unobserved economy • Other

15. OECD/Eurostat questionnaire (ctd) • Quantify the adjustments introduced for hours worked • For annual leaves and holidays • For sickness leaves • For strikes and temporary lay-offs • For paid but unreported overtime • For unpaid overtime

16. Conclusion The objective is to be able in end 2005: • To use at OECD national accounts based numbers for the denominator of the headline labour productivity level number • To be able to explain the source of the data, their difference with labour force statistics, and their international comparability Comments on the recommendations and on the questionnaire are welcome.