1.2 Productivity Stakeholders

Productivity concerns several stakeholders in society, apart from the shareholders who get more in return for the money they have invested and from the managers and workers that can stay employed in the companies that survive by being more productive.

• Consumers: productivity improvement may lead to lower prices for the products or services being produced more efficiently.
• Suppliers benefit from the productivity improvement of the companies they deliver good or services to since they will have the opportunity to enhance that delivery, if at least the extra end products or services are consumed.
• Labour unions and employee organisations: productivity improvement on the national level will improve the national economy accompanied by the creation of more new jobs and room for higher wages. On the other hand, technological innovation or cost cutting on labour or capital, can cause involuntary unemployment for a particular group or for individuals. By all means labour unions must protect the interests of these particular groups and individuals by supporting them to become employable in another sector or company. Labour unions should insist on standards to increase the level of skill and competence of workers. Furthermore they should continue protecting workers’ health. Especially where labour is plentiful, employers stand to make short-run gains by speeding up workers and working them long hours in spite of ultimate ill effects upon their health, because they can easily be replaced by others. And sometimes ignorant or short-sighted employers might even reduce their own profits by overworking their employees. In these cases the unions, by demanding decent standards of working conditions, can increase the well-being of their members. However productivity is not a bad issue. Unions must take into account the positive long-run effects of productivity on groups other than the affected particular group, as has been demonstrated in the example above.
• Employers organisations: productivity improvement from the perspective of employers organisations can be defended prima facie. More productivity means that with less input of labour and capital, the same output can be achieved, or with the same input, more output can be generated. Entrepreneurs constantly aim, all other things being equal, at more productive companies in order to generate more revenues and/or profits. Employers’ organisations should support entrepreneurs to facilitate their technological, organisational and human capital innovations which enable continuous productivity growth.
• Policy makers: As has been explained previously, productivity growth, all other things being equal, leads to economic growth and as such can be considered positively. However, in the short run particular groups can be affected negatively. To mitigate these negative consequences policy makers should aim at developing measures to make individual workers less dependent of a particular job or sector by encouraging training and education making them more employable and multidisciplinary. In addition, policy makers should follow up on the National Programmes aimed at productivity improvement and organisational development, which have been established in several member states, such as:
  • Germany has a long history on national programmes that started in 1974. Recently two new programmes started: Innovative Arbeitsgestaltung – Zukunft der Arbeit ((Innovative Work design – Future of Work: new forms of work and work organisation, education and training) and Initiative Neue Qualität der Arbeit (Initiative New Quality of work);
  • In 1997 Sweden started the programme ‘Humans, Technology and Organisation (LOM)’, that was to have ended in 2000, but has been extended to 2004. In addition to the LOM programme there is running to 2006 the National programme Sustainable Work systems and Health.
  • Denmark started the National Programme: 'Funds for the Promotion of Better Working Lives and Increased Growth’;
  • Norway started in 1994 the programme ‘Enterprise Development 2000’running to 2001. It was followed by the programme Value Creation 2010 for company and workplace development.
  • In Ireland an active centre, The National Centre for Partnership and Performance (NCPP), contributed to that country’s fast and successful economic development;
  • In Finland the Ministry of Labour stimulates and supports many programmes for organisational innovations, especially by the National programme: Finnish Work Place Development and Productivity Programme (TYKES).
  • In France a new law (Aubry, 1998) concerning shortening of working hours was accompanied by a programme to introduce new forms of work organisation
  • In the UK the Department of Trade and Industry launched The Partnership at Work Fund of which the aim is to promote partnership to improve performance at the workplace.
• SME’s, small and medium sized companies, benefit individually from productivity growth. However, as has been explained already, entrepreneurs who continuously fail to enhance their management will eventually go bankrupt. For SME’s it is of vital importance to continuously strive for better (production systems?), enhanced human capital and better capital equipment/machinery and technology to keep up with the pace of competitors.

Finally the call for more efficient and effective public services in the ‘old’ EU member states is becoming increasingly important. The demand for more and better public services in e.g. The Netherlands, Spain, UK is obvious, especially in the education and healthcare sectors. As long as these sectors are in hands of a national or local governmental organisation, they should give good value in return for the taxes that people pay. As the demographic situation in many EU countries also is unfavorable, a potential lack of labour can be foreseen at the same time as the share of elderly citizens is growing. This gives an equation that is hard to solve unless the productivity and quality of public services will be given proper emphasis. It is not the question of giving elderly people less care and attention, but it is the question of organising and managing the production of efficient services. In this respect the public service providers could learn from private enterprises. Although productivity is often more difficult to measure in the service sector and especially in public services, this should not prevent policy makers from introducing and developing the need for ‘productivity thinking’ in these areas.