Conference Board Finds Widening Productivity Gaps

Via ABC News/Money


The Associated Press

The gap in productivity growth between the United States and Europe widened sharply as U.S. businesses were more aggressive in laying off workers and pushing their remaining employees to be more efficient, according to a business research group. Growth in productivity is the key factor in rising living standards.

In a new report, the Conference Board estimated that productivity — the amount of output per hour of work — rose in the United States by 2.5 percent in 2009 while productivity was falling by 1 percent on average in the euro area, the 16 European nations that use the euro currency.

The Conference Board said in a report to be released Wednesday that the gap would narrow in the current year but the United States would still outperform much of the euro area. Conference Board economists forecast that productivity would strengthen to 3 percent growth in the United States in 2010 and return to positive growth of 2 percent in the euro area.

“These are unusually large differences in productivity growth between the United States and Europe,” said Bart van Ark, chief economist for the Conference Board, a New York-based research group. “U.S. employers have reacted much more aggressively to the recession than their European counterparts in terms of cutting jobs and hours.”

The United States normally has enjoyed stronger productivity in recent years than Europe, an increase many economists attribute to fewer U.S. restrictions prohibiting layoffs than in Europe.

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