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Article · February 005 Source: RePEc citations 35 reads 4,815 authorsgd801. Introduction
The presentation and use of measures of labour productivity and unit labour cost has been a core
element of the research programme of the Groningen Growth and Development Centre (GGDC) and
The Conference Board. In a range of publications attention has focused on productivity as an
important contributor to the improvement in living standards, the creation of better jobs and social
development.
1
Since 1999 these measures are also included with the Key Indicators of the Labour
Market (KILM) database of the International Labour Office (ILO).
2
Productivity measures are also
useful for studies of international competitiveness. Countries with rapid productivity growth rates are
better positioned to sell their products and services at lower prices. However, competitiveness is not
only determined by productivity, but also by the cost of inputs in the production process. Indeed, a
well-known measure of international competitiveness combines labour cost and productivity into a
single measure of labour cost per unit output. Unit labour cost (ULC) measures have been widely used
for international comparisons of cost competitiveness, but have been mainly compared in terms of
ULC trends or real effective exchange rates (REER). The focus of this paper will be on relative
levels
of unit labour costs, which is a rather unique measure not widely used elsewhere.
3
In section 2, the unit labour cost measure is defined and its usefulness and limitations for a
study of competitiveness are discussed. Section 3 provides an international comparison of
productivity and unit labour cost for a group of mainly advanced and medium-income countries which
are included in the GGDC database. Section 4 provides an extension to a more detailed breakdown of
unit labour cost measures by seven major manufacturing industry groups for three large advanced
countries (France, Germany and the UK) relative to the U.S.. Section 5 includes a discussion of unit
labour cost measures for some major developing countries. Finally, section 6 summarizes the main
findings and considers the implications for the creation and remuneration of jobs in advanced and low
income countries.
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