FBK’s Economic Club Experts Discuss Labour Productivity

Is Russia far behind developed countries in terms of labour productivity? How does labour productivity vary across different sectors? How is labour productivity affected by new technology trends and digitalization of the economy? These were some of the questions discussed by well-known experts at the meeting of FBK’s Economic Club.

In his opening speech Igor Nikolaev, Director of FBK Strategic Analysis Institute, presented a comparative analysis of labour productivity in various industries in Russia and other countries. He said that Russian Federal State Statistics Service does not provide data about labour productivity in RUB per person or RUB per hour replacing it with indices. However, using publicly available information about gross value added and hours worked it is possible to calculate labour productivity and compare it to European.

“The calculations show that the average labour productivity in Russia is 2.9 times lower than in Europe. The biggest gap is in agriculture (5.3 times lower) and the smallest gap is in science and professional services (2.1 times lower). I am sure that it is important to improve labour productivity but we clearly underestimate the importance of competition as the key contributing factor,” Igor Nikolaev said.

Andrei Yakovlev, Director of the Institute for Industrial and Market Studies of the Higher School of Economics, agreed that improved labour productivity is key for economic development. However, he said that competition will not settle all issues as there are many enterprises in so called “monotowns” survived from Soviet times.

“With regard to competition they should have been closed 10 years ago but this would have caused a social upheaval. That is why they continue to operate and labour productivity there is certainly far from perfect. The straightforward decision is to create more modern jobs in these regions and to replace inefficient production smoothly,” he said.

Vasiliy Burov, the Head of the Research Laboratory of Digital Transformation of State and Society under the Russian Presidential Academy of National Economy and Public Administration and a Member of the Expert Council under the Government of Russia, also expressed his opinion on the topic. He said that modern technologies in certain industries could have already increased labour productivity ten or even hundredfold. However, it is not currently clear what to do with the people who will be left without jobs because of the digitalization.

“That is why in many cases labour productivity is artificially understated. This issue will have to be tackled sooner or later but to do this it will be necessary to change existing business processes,” Vasiliy Burov siad.

FBK Economic Club is a unique discussion platform where journalists can meet well-known economists, politicians and public officials in order to discuss a wide variety of economic issues.