The Global Labor Productivity Index of the Economy (IGPLE) per hour worked stood at 95.4 points at the end of 2021, which implied an annual contraction of -6.4% and reached its lowest level in the last 12 years, reported the National Institute of Statistics and Geography (Inegi).
In this way, the index of labor productivity it was positioned at its lowest figure since the fourth quarter of 2009, the year of the global financial crisis, when it reached a level of 96.2% in seasonally adjusted figures.
Labor productivity, which is obtained from the relationship between the Gross Domestic Product (GDP) and data from the National Survey of Occupation and Employment (ENOE), had six quarters of decreases. The annual contraction reported at the end of 2021 is explained by a reduction in the subindex of industrial activities (-5%) and service activities (-8%).
The contraction of this indicator occurs in the same period in which the labor market not only reported the recovery of jobs lost due to the pandemic, but also registered 1.2 million additional employed persons.
“Labor productivity has to fall when fixed investment It is going down and fixed investment is at the level of 10 years ago, so it is likely to continue to decline,” said Gabriela Siller, director of Economic and Financial Analysis at Banco Base.
Gross Fixed Investment (GFI), explained the specialist, shows a lag of 2.32% and remains “relatively stagnant” at levels between 2 and 4% below what was observed prior to the pandemic and close to levels similar to those registered in the 2007.
For his part, Iván Arias, Director of Economic Studies at Citibanamex, agreed that the “weakening of investment” largely explains the drop in productivity index.
“This influences because the machinery, industrial plants and all the infrastructure in the economy deteriorate and equipment and infrastructure must be replaced to maintain production levels, but to the extent that this does not happen, the capacity production of each worker decreases. What has also not helped is the weak investment in human capitalwhich could be the other factor that increases productivity”, he explained.
According to the organization Mexico How are we doing? our country should grow 4.8% per year in the labor productivity index to advance in the goal of greater efficiency with the resources that are already available.
“Productivity matters because the economic growth of middle-income countries like ours can only happen by using the resources we already have more efficiently, that is, by being more productive”, the organization indicated through its economic traffic light.
Iván Arias stressed that the rate of productivity in the industrial sector it has maintained constant reductions in recent years and the level reported in the fourth quarter of 2021 is an all-time low. “This trend already came from years ago and the weakening of productivity in the services sector was added so that we are seeing these levels of productivity that we have not seen since 2009.”
The impact on income
On the other hand, the Unit Labor Cost Index had an annualized fall of -23% in non-financial private services companies, a decrease of -11% among businesses dedicated to construction and -8% in wholesale trade.
“Somehow it shows the panorama of the working market Mexican, as if there had been a structural change after the coronavirus crisis. Although in terms of numbers we already have the same number of formal jobs as before the crisis, it is not the same labor market, now there is lower productivity, lower wages and a high percentage of underemployment and informality”, he pointed out. Gabriela Siller.
In the opinion of Iván Arias, the weakening of labor productivity not only has an impact on the expectation of economic growth in the medium term, it also limits the wage recovery of workers by reducing pressures on labor costs and, therefore, that the wage improvement ends in higher inflation.
“Given these worrying data, hopefully a strategy can be carried out that improves the climate for private investment and that this is complemented by a growth in public investment, so that we can see a reversal of this productivity and better growth prospects and also better prospects for wages and family income”, said the specialist.