U.S. productivity is set to drop for the first time in over three decades, the Financial Times reports.
"Last year it looked like we were entering into a productivity crisis: Now we're right in it," think-tank Conference Board's chief economist Bart van Ark said.
Gross domestic product per hour is projected by Conference Board to drop by 0.2 percent this year. Output per person grew only 1.2 percent around the world in 2015, a drop from 1.9 percent in 2014. U.S. growth in output per hour skidded to just 0.3 percent last year, down from 0.5 percent in 2014. From 1999 to 2006, the pace was 2.4 percent.
Productivity growth lies at the heart of economic progress. Without an improvement in output for every hour worked, economies can grow only if people work harder and longer or more people find jobs. A downturn in productivity growth in one year does not matter much because economies will go through ups and downs as technology changes, but a persistent decline is a much more serious prospect. [Financial Times]
"Companies really need to invest seriously in innovation. It is time for companies to move on the productivity agenda to turn this story around," van Ark said. Jeva Lange