Productivity is a key driver of economic growth and improvements in living standards. A commonly used measure of productivity is the value generated per hour worked, also known as labour productivity. The OECD have recently released their latest productivity estimates for OECD countries in 2022.
When comparing labour productivity across countries, focus is placed on two key metrics: a country’s value creation, Gross National Product (GNP), and the total number of work hours. To make these figures comparable across countries, purchasing power parity (PPP) adjusted figures for GNP are used, which account for price differences between countries.
Highest productivity in Ireland and Norway
In 2022, the average labour productivity in OECD countries was $67 per hour. Ireland and Norway stand out with the highest productivity levels, exceeding $160 per hour, more than double the OECD average.
GNI narrows the gap
When comparing productivity levels across countries, it’s important to approach the numbers with caution. In some cases, as the OECD points out, Gross National Income (GNI) per work hour can be a useful supplement to labour productivity measured as value creation (GDP) per work hour. GNI accounts for net income from abroad, offering a more comprehensive understanding of economic efficiency.
The OECD notes that in many countries, comparisons between GDP and GNI per work hour yield similar results, as the underlying income flows are either small or balance each other out. However, countries like Ireland, Luxembourg, and Norway display significant differences between these measures due to the large role of multinationals in output and income transfers.
When using GNI per work hour as a productivity measure, the gap between Irland, Norway and Luxembour and the other OECD countries drop significantly. Still, Norway and Ireland remain at the top even when measured by GNI per work hour.
