Economics Hell, Fire and Productivity

It didn’t whip up lather of media excitement, but Labour Minister Paul Swain last month announced the establishment of Workplace Productivity Working Group to advise the Government on “ways for individuals and companies to work smarter”.
Essentially, the aim is to involve the Government, unions and employer groups in finding ways of improving the country’s lacklustre performance with labour productivity by encouraging high-performing business practices, ways of promoting workplace productivity and so on.
The group aims to raise awareness and debate on workplace productivity after examining successful methods already developed by businesses and it will look for ways to promote the issue to Government and the community.
Announcing the initiative, Swain described labour productivity as “the value of what employees produce for each hour worked” and noted that while economic growth rates in this country have improved over the past 15 years, it has largely been driven by stronger employment growth rather than improved productivity.
Any growth in productivity has mainly been achieved by cutting costs and shedding workers, he pointed out, but he’s aware of several firms achieving productivity gains with business practices that improve timeliness and quality, minimise costs and waste, and enable employee participation in setting and reviewing company goals.
The working group will report to ministerial reference group of the Ministers of Labour, Finance and Economic Development by the end of July. It will be supported by officials from the Departments of Labour, the Prime Minister and Cabinet, the Treasury, New Zealand Trade & Enterprise and the Ministries of Economic Development and Social Development.
With set-up like that, it’s no wonder ACT finance spokesman Rodney Hide reckons the idea’s just more wasted money. “The Government knows nothing about productivity,” he scoffed in radio interview. “What it knows about is talkfests, committees, red tape and paperwork, and I’m afraid this is just more of the same.”
United Future leader Peter Dunne also had doubts. He questioned whether formalised structure to grapple with the promotion of productivity would take the country much further ahead. There are good grounds for scepticism. The Government has circumscribed any consideration of politically contentious issues, such as tax rates and employment law, and when you keep tax rates and the working regime out of calculations, you are somewhat hampering the usefulness of the working party, eh?

By the grace of God?
There’s no sign of religion being considered, either. No doubt that’s because investment and savings rates, worker productivity and wage scales conventionally are the factors examined by economists to determine which countries will become richer or poorer. Religion has not been regarded as factor.
But don’t forget the Protestant work ethic, first fostered 200 years ago, which held that people were saved by the grace of God and handpicked for heaven. Wealth was sign people would pass muster at the Pearly Gates and the threat of damnation may have caused people to work harder.
The 19th-century sociologist Max Weber said the Protestant work ethic explained why predominantly Protestant countries tended to do economically better than others.
Ah, but can we prove it?
Robert J Barro, and Rachel M McCleary, from Harvard Business School, were aware that empirical research on the determinants of economic growth typically neglected the influence of religion. To fill the gap, they have used international survey data on religiosity for broad panel of 59 countries to investigate the effects of church attendance and religious beliefs on economic growth.
They found religion affects economic outcomes mainly by fostering beliefs that influence individual traits such as honesty, work ethic, thrift and openness to strangers, and economic growth is given its stimulus by whether people believe in an afterlife – especially hell. “In some ways we’re updating Weber, quantifying some of his ideas, putting new face on them, but also looking at them in modern data, seeing if there’s some elements of truth,” says professor Barro.
The research also showed that at certain point increases in church, mosque and synagogue attendance tended to depress economic growth, perhaps because of the extent to which larger attendance figures mean religious institutions are using up disproportionate share of resources.
On the strength of this, we have tip for Minister Swain: it’s not too late to add religious leader to the working group and slip religion into its terms of reference.

Bob Edlin is regular contributor to Management.

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