Friday 17 February 2017

More jobs or higher productivity?

Some countries have declining productivity rates, these countries include some developed countries including the UK. Currently the UK has a very low unemployment rate and should the UK sacrifice some of its employment rate to exchange for higher productivity. People may find in some developed countries, the manufactures are occupied by machines and very few workers, while in developing countries, the labour force is still the dominated power in manufactures. This is often seen as the evidence showing developed countries have better productivity than developing countries. This may indicate that when the investment in machinery increases, the productivity will improve automatically. In addition, some researchers claim that narrow wealth gap helps to improve productivity. This may make sense as when people are easier to break their class boundaries they have incentives to work harder. However, when the gap is too narrow, the incentives to work harder may decrease and the reason of why countries with narrow wealth gaps have better productivity is because these countries are developed countries. The real differences between developed countries and developing countries are developed countries have better technologies, more funding available, better financial sectors, and many other advantages excluding cheap labour costs. These advantages have one core function is to use a limited number of labours to produce more products. Once the demand is weak, the demand for products is limited, then the need for improving productivity becomes less significant. Moreover, when the demand is weak, then the unemployment stays low then the productivity is definitely going to reduce in order to equate supply to demand.
Overall, once the demand is weak, the supply is forced to be reduced, then productivity has little room to improve.

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