Globalization, alliances and networking: A strategy for competitiveness and productivity (Part 1)

Globalization, alliances and networking: A strategy for competitiveness and productivity

By Joseph Prokopenko, From :Enterprise and Management Development Working Paper - EMD/21/E , International Labour Organization.

1. Productivity, competitiveness and development

For many years productivity has been a key issue for national development strategies because of its impact on economic and social development. It is important as a source of income and as an integrative objective encompassing improved labour/management cooperation and worker participation, it is the criteria for enterprise competitiveness and a long-term strategy for governments, employers and employees to alleviating poverty and promoting human rights and economic democracy. It is a well-known fact that the most productive companies and government productivity-oriented policies are closely linked to the promotion of a better quality of working life, participation, market economic principles, individual initiative and creativity, and human-oriented management styles and practices.

Productivity objectives, accepted by all parties concerned, become the important instrument of just distribution of wealth, sound industrial relations and democratic workers' participation. Thus, productivity is a good tool to balance economic, social, technical and environmental objectives.

Productivity and poverty alleviation. There is strong macro-economic and statistical evidence that the more effective (productive and competitive) the national economy, the higher the personal income of workers and the lower the rate of inflation in the long-term. It also means more national income for social distribution for those who are young, old, handicapped or unemployed. Better productivity also provides more profit to invest in promoting economic growth in underdeveloped regions. Therefore high productivity, packaged with effective distributional social policy, is the best available means to alleviate poverty.


Productivity and promotion of employment. Long-term international statistical trends show that there is a strong correlation between national productivity and the level of unemployment. The more productive an economy, the more competitive it is in the foreign market and the lower the unemployment rate. The more productive an enterprise, the more income it can save for new investments and therefore create new jobs. It is ignorant to believe that productivity leads to unemployment, particularly in the long-term. Short-term negative effects of productivity on unemployment could be met by sound economic and social policies. Therefore, productivity is the best indicator of where to invest and the sources of funds for the creation of new jobs.

Productivity and human rights, democracy and tripartism. Human rights can be based on effective economic and social development. Economic democracy, for example, can be exercised through entrepreneurship, self-employment and small enterprise development which would provide equal opportunities for everyone to set-up their own firms or businesses or start an individual activity. These numerous undertakings could only survive on the basis of higher productivity and a conducive political and economic environment to exercise such economic democracy.

The most important objective of tripartism is a more effective and peaceful organization of economic and social activities, sound industrial relations as well as participation and gainsharing between major economic agents. Therefore, productivity improvement could be the common objective for all three parties - employers, workers and governments.

(To be con't)