In-Depth View of Global Labor Productivity Analytics

Worker productivity, formally measured as output by hour worked, has been closely monitored by organizations in the years following the pandemic to better understand the impacts to their workforce. Employers are seeking to grasp how remote work, AI and other technologies have influenced worker productivity. Though headlines continue to read that we are “returning to pre-pandemic conditions” seen back in 2019, we are experiencing post-pandemic trends we've never seen before.  

Labor Productivity Annual Growth Rate  

A look at some key markets across the globe using data from the Organisation for Economic Co-operation and Development (OECD), shows a variety of trends in labor productivity. The COVID-19 pandemic hit after what has been characterized as a long period of slow productivity growth, caused by the 2008 global financial crisis. Excluding 2020, which saw figures heavily skewed by the initial pandemic reactions, productivity growth since has been low or even negative. The US is one notable outlier which saw a large boost in productivity at the end of 2023. New technological innovations are a widely assumed cause, including the widespread use of AI and greater cloud computing.  

Taking a look at other economies with far slower rates, the UK has been in a depressed state of productivity growth for some time, due mostly to a lack of investment along with rising labor force inactivity rates. Australia experienced a significant drop in productivity last year due to surging employment but a lack of investments to increase output.  

Turning our attention to Canada which also saw a steeper-than-average fall in 2023, the Bank of Canada has cited the skills mismatch between workers and jobs being a large driver of this trend. This is alongside a higher proportion of small- to medium-sized companies which can lack economies of scale needed to become more productive. 

The common trend that's evident from just these examples, is that investment in new technologies is vital to solve the productivity problem, particularly where the labor market remains strong. If not addressed, countries risk further wage and inflation spirals. 

Global Labor Productivity Analytics Reveal Challenging Dynamic in the Workplace 

Pressure is building on managers to improve employee satisfaction to maintain productivity and retain quality workers. Employees with manageable workloads are twice as likely to be engaged, while disproportionate workload is a main driver of turnover. Healthy amounts of attrition can improve team performance, optimize cost and shift focus to employees driving forward company culture and vision.  

In a survey by BambooHR, 25% of executives hoped for turnover with RTO policies to organically right size their workforce, but ultimately conducted layoffs due to less resignations than predicted. The contingent workforce curates space to identify workers who are a long-term organizational fit to convert into a full-time position, avoiding future state turnover.  

The number of remote workers that multiplied overnight in 2020 has created a lingering complexity for managers in measuring productivity. Employees utilize mobile apps, such as Microsoft Teams and Outlook, to enhance their work capabilities, while others are “quiet vacationing” and take undisclosed trips while maintaining the appearance they are working. In a Resume Builder survey, 1 in 10 workers utilized mobile apps in the past year to maintain the façade they were working. Managers need to carefully consider how they measure productivity while also giving workers the flexibility and autonomy they desire.  

Fully remote work has proven to lessen collaboration and, as a result, reduce long-term growth and skills development. In a study by the Federal Reserve Bank of New York, productivity declined by 4% in workers who shifted to remote work during the pandemic. Remote work requires self-motivation, time management and exceptional communication skills, which not all workers have. Increased collaboration and utilization of virtual tools are essential in remote employees not falling behind. Hybrid work ultimately satisfies the employee’s desire for flexibility and the business’ need for onsite collaboration and oversight. For this model to be successful, employers must find ways to keep remote employees engaged, help to identify which roles are best suited and to recruit candidates that would thrive in this type of work environment.  

Generative AI’s Effect on Labor Productivity 

The rise in generative AI has been on a steady incline and the rapid deployment of the technology has created high demand for talent with this skillset. Over the past two years, according to data from Lightcast, there has been an exponential increase in the number of job postings requiring various types of artificial intelligence.  

Organizations are currently challenged with high costs and internal legal parameters surrounding the technology, ultimately slowing the adoption of AI and the positive impact it will have on productivity. However, less expensive technologies like Microsoft Copilot and ChatGPT have been widely deployed. These tools are effectively being used to enhance collaboration amongst teams, boost creativity and save time on various activities like drafting emails and catching up on missed meetings.  

While generative AI continues to evolve and improve work processes, the expected result is not to replace jobs but to increase productivity and performance. As workers continue to “do more with less,” AI will enhance the way we work by eliminating manual work and removing mental roadblocks. We can expect ongoing discussions about the impact generative AI will have on productivity as the technology becomes more integrated into workplaces. 

The Future of Work through the Lens of Global Labor Productivity Analytics 

Global workforce productivity measures show years of steady decline that is finding some relief with the increased use of generative AI. In addition, changes in workforce behavior created by the pandemic such as remote work and disproportionate workloads as well as rapid hiring and layoffs have shifted the stability of work, employee engagement, and ultimately, labor productivity.