At the beginning of this week, the National Administrative Department of Statistics (Dane) put on the table the salary and labor policies commission, which will define the increase in the minimum wage, productivity figures in Colombia in 2024, which revealed a surprising increase, which even led businessmen to question their measurement.
(You may be interested in: ‘The Dane presents all the figures, not what suits one sector or another’).
According to the figures presented by the statistical entity, Total Factor Productivity (TFP) was 1.73%, while labor productivity per hour worked reached 3.43%..
For its part, labor productivity per employed person and average productivity reached 1.76% and 3.14%, respectively.
Faced with these data, the businessmen members of Andi and the economic study centers, Anif and Fedesarrollo, They requested a technical review of the methods, assumptions and data used to calculate these figures.
(Also: Andi, Anif and Fedesarrollo ask to review productivity data provided by Dane).
“According to preliminary data presented by Dane, labor productivity would have increased more than 3% in the first three quarters of 2024, and total factor productivity increases 1.73%. These figures contrast significantly with the context current national economy. According to the most recent reports, for the first nine months of the year, economic growth was 1.6% and employment increased on average 0.7% during this same period, which would imply an improvement in productivity. 0.9%”the businessmen explained.
However, the director of Dane, Piedad Urdinola, in an interview with Portafolio, defended the measurement method and explained the reasons that led to the increase in productivity last year with respect to the historical figures of this indicator.
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Fewer working hours, more productivity
According to Urdinola, “What we are seeing, regarding the relationship between capital – labor, is that the capital stock has been growing in the economy throughout this year. So we have a reduction in effective hours worked and a growth in capital. When you make that relationship, I have a numerator increasing and a denominator decreasing, in such a way that we arrive at that productivity that is higher than what many analysts were expecting, because perhaps they did not take that type of information into account. overall, the value added figure, the figure of GDP, but they forgot to review these details that are very important in this estimate”.
Likewise, the director of Dane explained that there is a reduction in hours worked, compared to the historical figures of almost two hours in the last three years.
(Besides: Minimum wage 2025: how much would it rise if hourly labor productivity is applied).
“In 2021, the average number of effective hours worked per week was 44 hours. In 2024 it was 42.1. In other words, in these years we have seen a reduction of almost two hours for the entire economy”.
And he added that “When we disaggregate sector by sector, we see this same reduction, which is gradual year after year, in some more than others, for example, financial intermediation, real estate, business and rental activities, it goes from 43.4 to 42. A reduction practically of three hours. That said, what we are observing is that in the total economy and for each of the lines where we measure, there is a drop in the effective hours worked per week”.
It should be noted that on July 15, 2023, the reduction in working hours in Colombia came into effect, which will have a gradual change until 2026 to go from 47 to 42 hours of work per week.
The director of Dane also explained that to calculate the total productivity of the factors and the two labor productivities, a methodology is used Laklems, which comes from a global project developed by Professor Dale Jorgensen of Stanford University.
“This model has adaptations that correspond to the economic realities of Latin America and also to the statistical production of each of the regions. This is an OECD methodology, and it is recent (2021), because one of the interests is to have the production with the most recent methods that are at the forefront”.
Productivity, as well as the inflation that will be known this Friday, are the basis on which the proposals for the negotiation of the minimum wage in Colombia are built each year.
PORTFOLIO
