J. THE CHARACTERISTICS OF MULTINATIONAL ENTERPRISES J.2. Average labour productivity: value added per employee ■ In addition to being larger on average than firms ■ Within industries as well, foreign affiliates display under national control, foreign affiliates also display higher labour productivity levels than firms under higher levels of (apparent) labour productivity. Without national control. The fact that foreign affiliates are on exception, foreign affiliates have higher productivity average more capital-intensive contributes directly to than firms under national control. The differences their higher labour productivity. between the two types of firms are especially large in Ireland and Hungary. ■ In manufacturing as well as in the services sector, value added per employee in foreign affiliates is higher than in firms under national control. On average, Sources apparent labour productivity is higher in manufacturing •OECD, AFA Database, January 2010. industries than in services, owing to the higher capital •OECD, FATS Database, January 2010. intensity of manufacturing. ■ Differences in the sector composition of foreign For further reading affiliates and of firms under national control are an • OECD (1994), The Performance of Foreign Affiliates in OECD important reason for this. The fact that foreign Countries, OECD, Paris. affiliates are more often active in scale and in capital- • OECD (2005), Measuring Globalisation: OECD Handbook on intensive industries partially explains the difference Economic Globalisation Indicators, OECD, Paris, in aggregate labour productivity. www.oecd.org/sti/measuring-globalisation. Measuring apparent labour productivity Productivity is commonly defined as the ratio between output volume and volume of inputs and measures how efficiently production inputs, such as labour and capital, are used to produce a given level of output. Productivity is considered a key source of economic growth and competitiveness and, as such, is basic statistical information for many international comparisons and for assessments of country, industry and company performance. Apparent labour productivity is defined as the ratio of value added to number of employees and gives an idea of the productivity of the production factor labour. Despite the progress made, the measurement of productivity still suffers from a number of statistical problems. Countries use different concepts and basic statistical sources, and this can hinder international comparability. Differences may exist in the measurement of value added (factor prices, market prices, etc.). In terms of labour input, differences in workers’ educational attainment, skills and experience can also bias results. Productivity indicators in general and the indicator of apparent labour productivity should therefore be interpreted with care. 174 OECD ECONOMIC GLOBALISATION INDICATORS © OECD 2010 Figure J.2.1. USD thousand 300 Value added per employee of foreign affiliates and national firms in manufacturing, 2007 250 J. THE CHARACTERISTICS OF MULTINATIONAL ENTERPRISES 200 J.2. Average labour productivity: value added per employee Affiliates under foreign control 150 100 50 0 Ireland United States (2002) Netherlands (2005) Firms controlled by the compiling countries Norway USD thousand Figure J.2.2. 150 United Kingdom Sweden Value added per employee of foreignAustria affili 100 Finland Affiliates under foreign control Spain Germany (2006) 50 Italy France Israel (2005) 0 Denmark (2002) Ireland1 ates and 1national 2 firms Portugal in services, (2006) 2006 1. Enterprises with 20 employeesFrance or more. Slovenia Firms controlled by the compiling countries Information on data for Israel: Hungary (2006) Norway http://dx.doi.org/10.1787/844673702158 OECD ECONOMIC GLOBALISATION INDICATORS © OECD 2010 Czech Republic Sweden Slovak Republic (2006) United Kingdom (2005) Estonia (2006) Finland (2005) http://dx.doi.org/10.1787/888932315602 Netherlands (2005) Austria (2003) Italy Spain . Hungary (2005) 1 2 Portugal Czech Republic http://dx.doi.org/10.1787/844718541773 Slovak Republic Australia (2000) 175 From: Measuring Globalisation: OECD Economic Globalisation Indicators 2010 Access the complete publication at: https://doi.org/10.1787/9789264084360-en Please cite this chapter as: OECD (2010), “Average labour productivity: value added per employee”, in Measuring Globalisation: OECD Economic Globalisation Indicators 2010, OECD Publishing, Paris. 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