Study of INSTAT Experts in 13 thousand businesses/ Increase in wages by 1% increased productivity by 0.6%

2023-09-01 07:42:00, Aktualitet CNA

Study of INSTAT Experts in 13 thousand businesses/ Increase in wages by 1%

An independent study by INSTAT experts in about 13,000 enterprises found a positive relationship between wage growth and productivity.

Data obtained from the Structural Survey of Enterprises in 13,424 active businesses showed that a 1% increase in wages per employee resulted in an average increase in labor productivity of 0.6% over the period 2015-2020.

A positive relationship is also observed between productivity and profit per employee, where a 1% increase in this indicator increases productivity by an average of 0.38%.

Also, this positive relationship is also evident for other indicators such as investments to hire, where a change of 1% increases productivity on average by 0.024%.

Large enterprises have averaged higher labor productivity than small ones. The labor market shifts workers to more productive enterprises, and this reinforces the importance of large enterprises for increasing productivity.

INSTAT's expert study found that 5 large enterprises are 3.6% more productive than small and medium-sized enterprises, while goods producers have a 51.4% higher productivity than service producers.

Labor productivity reflects the enterprise's ability to generate higher productivity or added value. Productivity, in general, is related to the ratio of production factors and products produced.

In the case of Albania, according to the data of the Structural Survey of Enterprises, in recent years the private sector has had a rapid expansion, thereby influencing the increase in the number of employees and the level of production.

Efficiency theories of wages assert that they positively affect labor productivity, suggesting that increasing wage levels encourage employees to increase productivity in response to higher incentives offered by the firm.

On the other hand, other studies show that higher worker productivity increases wages.

According to the Convergence Report of the European Central Bank (ECB), wage growth should come as a result of increased labor productivity at the enterprise level, taking into consideration labor market conditions and developments in competing countries to ensure long-term stability macroeconomic./ Monitor