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Productivity at a glance

NPI - Inspiring a Competitive South Africa

Importance of productivity

Productivity accelerates economic development. It has been shown that economic development improves the quality of life of people. This is the key factor that enables society to add value to goods and services through better use of resources. This results in better positioning of our goods and services in world markets. Growing South Africa's productivity levels will contribute towards the prosperity of all South Africans, making our companies more competitive in the global market, and thus contributing to the upliftment of our people.

A comparison of national economies has shown that the more productive the national economy becomes, the higher the personal income of workers and the lower the rate of inflation in the long run. When the economy increases its productivity levels it becomes more competitive and tends to lower the rate of unemployment. The more productive an enterprise or organisation, the more income it generates and saves for investment. In this case, more jobs can be created. Since productivity results in the efficient use of resources, it contributes positively to sustainable development.

As a nation, we should approach productivity with a focus on increasing value addition rather than reducing resources such as labour, materials and energy. This will enable productivity to drive both job creation and economic development.

Definition of productivity

The definition that informs our approach to enhancing productivity in South Africa was defined by our social partners at Nedlac as:

"Productivity is the efficiency with which Inputs of Capital and Labour are used.

It relates to the conversion of Inputs (resources) into Outputs (goods and services) efficiently, effectively with the optimum use of human capital and physical resources for the benefit of the society, economy, and environment."

The following are the key elements of productivity:

• The Outcome of productivity is Continuous Improvement of Performance;
• The Improvement must be Measurable;
• Key drivers of productivity are:
  • Effectiveness (Doing the right things)
  • Efficiency (Doing things the right way)
  • Utilisation (Optimum use of human capital and physical resources)
  • Elimination of all forms of waste
• The beneficiaries of productivity must be the:
  • Environment
  • Economy, and
  • Societ

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