International Conference on Labor Productivity

LEON GREENBERG*

RECOGNITION OF THE ROLE of productivity in raising economic well-being has, since World War II, resulted in several international conferences in which the United States and countries of Western Europe participated. But there have been only two general conferences in which the United States and countries of Eastern Europe participated. The most recent of these, sponsored by the International Economic Association, was held at Cadenabbia, Lake Como, Italy, from August 31 to September 8, 1961. Most of the participants were from university institutes; a few were from government.1

Four major subject areas were covered at the conference: Concepts and Measurement of Productivity; International Comparisons; Wages and Productivity; and Technical, Managerial, and Organizational Factors Affecting Productivity. It was agreed that the discussions would be confined to labor productivity, that is, output per unit of labor input.

Papers prepared by 15 Western and 16 Eastern participants on various aspects of the four major headings were circulated prior to the conference and served as the basis for discussion. Major attention was given to concepts, methodology, and techniques. Even in those cases where empirical work was described, the discussions tended to center around methods and data problems.

It is expected that the papers will be reproduced almost in their entirety in a scheduled book about the conference. Consequently, this article deals mostly with highlights of the discussion. It is not an official report, although it presents some of

the conclusions agreed upon; rather, it represents the impressions of one participant.

Discussions of the Conference

Productivity and Wages. Some of the most interesting discussions occurred during the review of the relationship of productivity and wages. Here the Soviet Bloc tended to stress the different objectives and advantages of a "planned socialist economy versus a capitalist economy." They stated, or implied, that workers in their countries shared more fully in the gains of increased productivity than did those of the capitalist countries and that their system resulted in a more rational industry wage structure.

However, the alleged advantages tended to dissolve during the discussion. For example, a Soviet participant asked about recent trends in the relationship between productivity and wages in the United States (assuming that productivity had moved faster than real earnings). In reply, it was pointed out that the real wages (actual wages adjusted for changes in consumer prices) of all employees in the nonfarm economy had about kept pace with output per man-hour in the United States in the postwar period, going up faster in some years, more slowly in others.

In contrast, a Czechoslovakian paper said, "wages should rise in connection with increased productivity of labor, not, however, at the same rate but slower than productivity of labor." Wage increases in Czechoslovakia are controlled in accordance with this principle. This view of the relationship of wages to productivity aroused some curiosity among the American delegates, since unions in the United States would regard this principle as an inequitable distribution of the benefits of rising productivity. The Czech delegate commented that the real benefits of Czech workers actually went up more because of expenditures by the government for education, culture, hospitalization, and other such activities. (Many benefits of this and other types are, of course, also made available to American workers.

* Chief, Division of Productivity and Technological Developments, Bureat of Labor Statistics.

1 Countries represented were Czechoslovakia, France, Hungary, Italy, Po land, Romania, Sweden, the Union of Soviet Socialist Republics, the United Kingdom, and the United States. Originally, 20 participants from Western countries and 20 from Eastern Europe were scheduled; however, three orig. inally scheduled Eastern delegates, including the two from East Germany did not attend

but evaluating them would involve complex analysis of tax systems, measurement of government services to the individual, and other factors.) It was acknowledged that the restriction on wage increases was also part of a plan for maintaining or increasing the share of national income going to investment versus the share going to consumption.

Papers from Czechoslovakia and Poland noted that economic planning and control enabled the government to establish a rational system of wages, designed to attract workers to those industries which were most important to the economic development of the country. Data were presented showing differential wages by industry. However, comparisons of the industry wage structure of the free enterprise economy of the United States with those of the other two countries showed a striking parallel in the ranking of most of the industries. In summary, the discussion indicated that interindustry wage rate differentials, the experience with incentive methods of pay, and the concern with increasing technical and managerial manpower among countries showed a number of resemblances, taking into account, however, differences arising out of variations in social system.

Several questions were raised by the Eastern members dealing with social and economic trends in the capitalist countries. One, for example, asked about the lower wages for women than men and for Negroes than whites in the United States. This was answered by a brief review of the history of employment of women and Negroes in the United States, an acknowledgment of the existence of certain discriminatory practices, a description of the important progress that has taken place, particularly in the postwar period, and some examples of the current employment situation of women and Negroes.

Measurement of Productivity. The Communist countries apparently make extensive use of productivity measurement for operations and management control by government. Such measurement, therefore, appears to play a more important role

2 This concept was also discussed at length at a Geneva meeting of Western and East European countries in January 1961. However, at that meeting, discussion centered around a different technique-that of using net output as the numerator of the productivity ratio, excluding the value of depreciation. The two methods have similar, but not identical, objectives and do not yield identical results.

* See "Labor Turnover in the Soviet Union," pp. 17-19 of this issue.

in those countries than in the United States, where it is used primarily for economic analysis. However, the report to the conference prepared by the Program Committee contained the following conclusions:

Labor productivity represents a complex economic concept, expressing the degree to which labor is utilized effectively. The discussion reflected that there are a number of different concepts and measures of productivity entailing different definitions of labor inputs and definitions of output. Moreover, measures differ according as the interest is an enterprise, an industry, or any economy as a whole. The necessity for a well-rounded study of labor productivity requires the use not of one single measure or index, but of a whole system of mutually supporting measures of levels and changes in labor productivity. These indexes should include measurement in physical output and money terms, calculated for different groups of employees and different periods of working time.

The Soviet Bloc countries prepare the familiar type of labor productivity measures, e.g., industry output per unit of labor employed in the industry (which they refer to as "live" labor). However, they believe that some account should also be taken of the change in volume of equipment utilized by the industry. For this reason, they also advocate the preparation of measures of output per unit of live plus embodied labor. The embodied labor represents the products of past labor or, in other terms, that part of equipment which is used up in the production of goods.2

Some questions were raised concerning the limitations of productivity indexes which (as in the United States) do not include the entire labor force, both employed and unemployed. The Eastern delegates said that workers in their countries are guaranteed employment, so there is no unemployment, and this puts their countries at an unfair disadvantage in making productivity comparisons. This issue was brought up several times during the conference and at informal after-dinner meetings, with Eastern Bloc members contrasting their lack of unemployment with the high level of unemployment in the United States. The Americans pointed out that the contrast is not as great as it appears, since the U.S. figures include persons changing jobs, new entrants seeking their first job, and others whom the Communist countries do not consider as unemployed.3

In discussing unemployment, the Eastern representatives said that when the job of a socialist worker is abolished, he is offered another job.

If one is not available in the same locality, he is offered a job in a different locality, with relocation expenses provided. If he does not like the job offered, he does not have to take it. What happens if he refuses? This never happens; the worker always accepts!

When it came to the measurement of national output, the Eastern economists indicated that they were concerned only with "socially useful" production-a Marxist concept. For this reason, they exclude trade and service activities from their national accounts. The Western economists, of course, regard all activities as a contribution to national output.

A question was raised by an American delegate about Soviet publication of current indexes of production based on 1926-27 price weights (i.e., in 1926-27 rubles), although the authorities apparently have prepared indexes based on more recent weights. Price relationships and productmix both change over time, so that eventually early-year weights become somewhat unrealistic. Therefore, most countries periodically revise and bring up to date the weighting scheme for their production indexes. Current-year weights usually yield indexes which show a lower rate of production gain than that shown by indexes with base-year weights. The American delegate noted that an index of Soviet production based on recent-year weights would show a substantially lower increase since the 1920's and 1930's than their currently published index, because of the enormous change in the character of Soviet production as the country became industrialized after 1926. Such an index would also be more comparable with those now published by the Western countries. On this point, the report of the Program Committee said:

In considering the growth of productivity of an economy as a whole over a period of time, it is necessary to combine the changes in productivity in the various segments of an economy by means of appropriate weights. The discussion reflected that both weights of a base year and a current year provide significant measures of productivity for international comparisons.

International Comparisons. Productivity comparisons were presented for different industries. in the United Kingdom, the United States, and the Soviet Union. Relative performance varied quite widely among industries, and the Russians.

estimated their overall level of industrial productivity (output per man-hour) to be about 40-50 percent that of the United States-but they expected to catch up rapidly.

The authors of the papers on international comparisons emphasized the many difficulties they encountered because of lack of detailed data and of adequate definitions and explanations. They cautioned that, as a result of these difficulties, their estimates in many cases should be considered only as approximations. They hoped that eventual improvement in data would lead to more accurate estimates.

Representatives from both the Eastern and Western countries complained about the paucity of statistical information. Offers of assistance from this writer to one of the more critical Soviet delegates were ignored although some of the other Eastern representatives asked for copies of U.S. publications. Both the Americans and Russians indicated that more diligent research into official publications would show that the situation was not quite as bad as depicted.

The discussion of international comparisons of productivity did not wind up in an impasse over the superiority of one type of measure over another. Rather, it was agreed that meaningful international comparisons require various kinds of measures, accompanied by careful definition and explanation of their content and meaning. Specifically:

In international comparisons, it is desirable, for the purpose of arriving at objective conclusions

a. Not to confine the comparison to isolated and partial measurements, but to make the comparisons on the basis of an entire system of measurements. In particular, in addition to comparing productivity in physical terms, it is desirable to compare output in terms of gross or net output per employed person (per annum, per day, per hour) as well as comparing indices of utilization of energy and electric power.

b. In utilizing figures in money terms, output of the countries being compared should be expressed in the prices of both countries.

c. There should be taken into account the qualitative aspects of the comparisons. This includes not only qualitative differences in the commodities produced, but also qualitative differences in the composition of the labor force.

Factors Affecting Productivity. The discussion on technical managerial, and organizational factors affecting productivity was probably the least con

troversial of the conference. There was, for example, almost unanimous agreement that the single most important factor affecting labor productivity was the amount and type of technology used in production. Other factors discussed included high level (executive) manpower, electric energy consumption, research and discovery, and specialization of labor.

It was noted that complex modern technology leads to greater emphasis on centralization. Because of this, delegates from the Soviet Union said they have found it necessary to put more management control at the top levels, that is, in the ministries. In the United States, of course, management control resides primarily with the enterprise, and decisions about decentralization or centralization are made by company executives.

Commentary

This meeting was a conference of professional economists on technical and other problems related to the four main agenda items. At such a meeting, it is, of course, inevitable that different opinions, methods, and problems will arise if the economists come from countries with vastly different economic systems. However, it seemed to this observer that the East European economists tended to stray off the path of straightforward professional exposition and presentation of factual information. Their methods were to extol the virtues of a planned socialist economy or to critize, directly or implicitly alleged weaknesses of the free enterprise system. Some examples have been indicated in this report.

Any conference with nearly 40 active participants can be difficult. There is not enough time for adequate questions and answers, and the give

and-take exchange which may be possible in a small group is not feasible in a large one. At an international conference, the differences in language add an additional handicap (this one was conducted in English and Russian with simultaneous translation). Nuances, idioms, and colloquialisms are frequently lost in translation, sometimes resulting in serious misinterpretation. For example, a Russian's comment about one of the American papers was translated as "obstructionist": later it was learned that what he had said was "abstract."

But on the whole, there seemed to be a genuine desire for an exchange of views on the technical matters of the conference. With few exceptions, attentiveness and respect were accorded to the speakers from both groups. The personal attitudes, during the meetings and at the informal after-dinner get-togethers, were friendly. At the concluding session of the conference, hope was expressed that the meetings would lead to a greater exchange of information and that future conferences might be held to explore related subjects. They included the measurement of output and national income, as well as of service-type activities, the index number problem, the meaning of employment and turnover of the labor force, the relation of working hours to productivity, the role of decentralization and centralization, the influence of international specialization on productivity, the experience with incentives for both workers and management personnel, the measurement of the specific contribution of particular factors in the growth of productivity, the role of scientific research and invention in increasing productivity, and the special problems involved in raising the productivity of labor in the underdeveloped nations.

IV-The Bridgeport Program

PHYLLIS GROOM*

A SCARCITY OF WORKERS trained in certain occupations coupled with a rate of unemployment hovering just under 9 percent early in 1961 made Bridgeport, Conn., a likely prospect for a retraining program for unemployed members of the labor force. In May 1961, jobless workers in Bridgeport began attending a pilot course in machine shop skills; by fall, five classes had graduated and the program was expanding to cover other occupations and other localities. This article describes the genesis of the program, some of the characteristics of the trainees, and their selection, training, and placement. In addition, some evaluation of the project is attempted. Among the factors considered in choosing Bridgeport for study were that it had conducted a survey of its labor resources and needs, that the retraining program involved various government and community groups, and that the training was to give the long-term unemployed actual industrial skills leading to permanent employment.

Evolution of the Program

The Bridgeport training program is part of Connecticut's Community Action Plan to raise the skill level of the work force. The plan calls for surveys to determine the skilled manpower and training needs of each labor market area, establishment of more apprentice programs in all levels of skill, establishment of related courses in vocational schools, improved guidance for direct

ing youths toward industrial skills, concerted efforts from such community organizations as manufacturers associations and labor unions, and the short-term single skill training courses to be described. Connecticut has developed this program without specific retraining legislation, such as that recently enacted in Ohio, Pennsylvania, and West Virginia.

On January 24, 1961, Connecticut's Governor John N. Dempsey recommended in his first message to the legislature "a pilot program in the State vocational-technical schools for retraining workers whose present skills are no longer in demand." He spoke also of his intention "to direct the Departments of Education and Labor to work more closely in evaluating the State's present and future vocational-technical educational needs and developing training programs more suitable to the needs of our economy."

Shortly after the Governor's address, the Commissioner of Labor set up a departmental retraining committee, composed of the directors of research, apprenticeship, and the employment service, to investigate the possibilities of conducting a retraining program for the Bridgeport unemployed. The committee explored the local employment situation and the business outlook

*Of the Office of Publications, Bureau of Labor Statistics.

1 The study is based primarily on interviews and statistical data obtained from State and local officials of the Connecticut Department of Labor, the director and the assistant director of the Bullard-Havens Technical School in Bridgeport, and the executive director of the Bridgeport Manufacturers Association.