High price of productive labor

Most of Russians work long and inefficiently

According to latest discoveries: in spite of hard-working nature, labor productivity of Russians is catastrophically low. The price that the business pays for it is evident: low profitability and lost profit. What steps will help change the trend that hinders the growth of the domestic economy?

Russian paradox. The recent results of an investigation of the Organization for Economic Co-operation and Development (OECD) find out the paradox of the Russian labor market. On the one hand, as of the time we work more than residents of other countries, but on the other hand, the workforce productivity of Russians is at one of the last places in the world. As a result, we are faced with the concept of high labor intensity: in order to produce a unit of production we need more working time than in other countries, and the reason lies in both the organization of the work process and the standing of fixed assets, i.e. equipment, machines, tools and materials.

Problems of motivation. One of the main problems in the way of high labor productivity is associated with a weak motivation. That is the factor, which hinders the most of Russians to fight for high efficiency. Business is not even in a hurry to pay more attention to the questions of staff motivation. The results of the OECD investigation show that we lag behind the foreign countries not only in terms of labor productivity, but also in terms of salaries. And the laws of the market economy reminder: just the high salary predetermines the high productivity, and not vice versa.

Necessity for modernization. The dependence of labor productivity on the standing of fixed assets is evident: the better is the equipment, the higher is the efficiency. However, what is evident in theory - the need for equipment modernization - in practice is not implemented. Moreover, compared to the beginning of the post-Soviet period the situation is getting only worse: wearing is increasing, investment in the upgrade - falling. As a result, the problem of prolonged deindustrialization arises: we are not just short of modern equipment, there are also no well-equipped workplaces, and therefore no highly skilled personnel. The problem is redoubled by sanctions that limited access to foreign borrowed funds, as well as unwillingness of business owners to invest in long-term projects with a long pay-off period. The volatility of the economic situation makes the areas with the short pay-back period much more attractive.

Rules of play. It is evident that the business and state are going to have to fight for the increase in labour productivity together. And if the business will have to start investing in long-term projects aimed at modernization of fixed assets and learning, how to motivate the staff, the main task of the state is to give the private sector guarantees of stability and predictability of the economic policy, transparent rules of play for 4 - 5 years (s. also Article from 31.01.2017 and Article from 28.02.2017) – a period, being sufficient for a full-fledged renewal of fixed assets..