Labour productivity in mining and agriculture using Indonesia, The Essay

Labour productivity in mining and agriculture using Indonesia, The Philippines, and The US as case studies - Essay Example Another critical finding of this study is that the power of western economies to resist to global economic pressures cannot be guaranteed. For example, the findings in regard to labour productivity in USA are encouraging but no estimates have been made for the country’s labour productivity trends in the long term. On the other hand, the level of labour productivity of a country can be high even if the status of the national economy is not as high as could be expected; the case of Philippines is an indicative example. For this reason, when trying to compare the labour productivity indicators of countries worldwide it would be necessary to refer not only to their current performance in the sectors involved but also to their socio-cultural characteristics, as influencing all types of industrial activities developed locally. 2. Comparative analysis of labour productivity and the associated changes in sectors of production, in agriculture and mining sectors According to a quite des criptive definition, labour productivity is ‘a measurement of efficiency of production derived from the ratio of the real output to input over a period of time’ (National Statistics Office – Republic of the Philippines, 2012) 2.1 Indonesia The performance of Indonesia in regard to the growth of its economy is impressive. In fact, currently the country’s economy as ranking at the 16th position in the context of the global market (McKinsey and Company, 2012, p.1); by 2030 the economy of Indonesia is expected to be at the 7th position of the relevant index (McKinsey and Company, 2012, p.1). The significant increase of labour productivity, at a level of 60%, is considered as the key reason for the rapid growth of the country’s economy (McKinsey and Company, 2012, p.1). For reaching the targeted level of economic growth, i.e. for becoming the 7th most powerful economy in the world, Indonesia needs to increase the level of its labour productivity by †˜an additional 60%, compared to the rate achieved between 2000 and 2010’ (McKinsey and Company, 2012, p.1). In order to understand the rate of labour productivity in Indonesia it would be necessary to refer to the country’s trends in regard to labour force and employment growth. These trends are presented in Figure 1 below. An increase in the labour force in general seems to exist from 2004 up to 2010; however, this increase does not reflect the employment of young people, age between 15 and 24 (Figure 1); for the specific category of the labour force, a trend for continuous decrease is revealed for the years 2004 to 2010 (Figure 1). Figure 1 – Labour force and employment growth trends in Indonesia for the years 2004 to 2010 (source: ILO 2011, p.9) It should be noted that the level of limitation of youth participation in the workforce has been especially high from 2007 up to 2010, while from 2005 to 2007 signs of standardization of the percentage of young peopl e entering the workplace seemed to exist (Figure 1). In regard to the distribution of labour force across the country’s industries, the following facts should be highlighted: most of workers in Indonesia are employed in the agricultural sector, with a percentage of 38.1 (Figure 2 below), even if the sector’