Indicator Name, Target and Goal

Indicator 8.2.1: Annual growth rate of real GDP per employed person

Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors

Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Definition and Rationale

Definition:

This indicator conveys the growth rate of real GDP produced by unit of labour input. This indicator is generally defined as the percentage change in the real GDP (at base year constant prices) per employed person—also known as labour productivity—between two consecutive years.

However, labour input more widely refers to all persons who contribute to the production of goods and services within the SNA production boundary, not only the employed. In fact, according to the new standards laid out in the 2013 Resolution concerning statistics of work, employment and labour underutilization, the labour input contributing to the GDP comprises not only employment (work done for use by others for pay or profit) but also own-use production of goods, unpaid trainee work and some forms of volunteer work as well. 

Concepts:

GDP is the measure of the monetary value of final goods and services that are bought by the final user, which are produced in an economic territory/country in a given time year.  It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. It can be measured either by:

(1)    The expenditure method – the sum of expenditures on final consumption, gross capital formation and net exports; or

(2)    The production method – the value of final outputs minus any intermediate consumption, plus the net taxes (taxes minus subsidies); or

(3)    The income approach – the sum of compensation of employees, gross operating surplus, gross mixed incomes and the net taxes on both production and imports. 

Real GDP is the GDP figure adjusted for price changes (i.e. inflation or deflation). It is adjusted using the ratio of prices in the current year to the prices in a given base year. 

Employment comprises all persons of working age who during a short reference period (one week), were engaged in any activity to produce goods or provide services for pay or profit. The working-age population is usually defined as persons aged 15 and above. 

Rationale and Interpretation:

Real GDP per unit of labour input (in terms of one person contributing to the production of goods and services within the SNA production boundary, or as more generally defined, in terms of one employed person) is a measure of labour productivity. When monitored over time, it offers insight into labour productivity growth, and on the evolution, efficiency and quality of human capital in the production process. Economic growth in a country can be ascribed either to increased labour input or to more effective work by those who are employed. This indicator casts light on the latter effect, being therefore a key measure of economic performance. Labour productivity (and growth) estimates can support the formulation of labour market policies and monitor their effects. They can also contribute to the understanding of how labour market performance affects living standards.

Data Sources and Collection Method

The data for GDP that is used for indicator is compiled by the national statistical offices, ministries of finance or economy, as part of their national accounting activities. 

The employment or labour input data are derived from labour force or other nationally representative household surveys with an appropriate module, which are also conducted by the national statistical offices or the ministries of labour. In the absence of such surveys, establishment/firm surveys, administrative records or other official estimates based on reliable sources such as the population census can be used. It is important to note, however, that establishment surveys only capture the number of jobs, and not the number of persons employed, and may also be limited to the formal sector. 

Method of Computation and Other Methodological Considerations

Computation Method:

First, GDP per employed person is obtained by dividing the GDP for that year by the number of employed persons in the country in the same year using the formula: 

Then, the annual growth rate per employed person of real GDP for the year t is calculated as follows: 

where,

LPt is the real GDP per employed person (labour productivity) at constant base year prices for the year t; and

LPt-1 is the real GDP per employed person (labour productivity) at constant base year prices for the year t-1. 

Comments and limitations:

GDP is mostly calculated based on the SNA. However, there are still significant problems in international consistency of national accounts estimates due to factors such as differences in the treatment of output in services sectors, differences in methods used to correct output measures for price changes (in particular, the use of different weighting systems to obtain deflators) and differences in the degree of coverage of informal economic activities. 

The degree of reliability of the estimates on employment or labour input is also dependent on the degree of coverage of all productive activities, and particularly informal activities, by the statistical source used. 

Proxy, alternative and additional indicators: N/A

Data Disaggregation

Disaggregation is not required for this indicator. However, disaggregation by region and economic sectors can be beneficial.

References

Official SDG Metadata URL
https://unstats.un.org/sdgs/metadata/files/Metadata-08-02-01.pdf  

Internationally agreed methodology and guideline URL
(1)    https://www.ilo.org/global/statistics-and-databases/standards-and-guidelines/resolutions-adopted-by-international-conferences-of-labour-statisticians/WCMS_230304/lang--en/index.htm

(2)    http://www.ilo.org/empelm/projects/WCMS_114246/lang--en/index.htm

(3)    http://unstats.un.org/unsd/nationalaccount/sna2008.asp  

Other references
ILO (2013). Decent Work Indicators: Guidelines for Producers and Users of Statistical and Legal Framework Indicators. Geneva. Available at: http://www.ilo.org/wcmsp5/groups/public/---dgreports/---stat/documents/publication/wcms_223121.pdf

ILO (2015). Key Indicators of the Labour Market. Table 16 – Labour Productivity. Geneva. Available at:  http://www.ilo.org/wcmsp5/groups/public/---dgreports/---stat/documents/publication/wcms_422456.pdf

ILO (2013). Resolution Concerning Statistics of Work, Employment and Labour Underutilization. 19th International Conference of Labour Statisticians. Geneva. Available at: http://www.ilo.org/global/statistics-and-databases/standards-and-guidelines/resolutions-adopted-by-international-conferences-of-labour-statisticians/WCMS_230304/lang--en/index.htm

UNSD (2008). System of National Accounts 2008. New York. Available at: https://unstats.un.org/unsd/nationalaccount/sna2008.asp

ILO (2010). Trends Econometric Models: A Review of Methodology. Geneva. Available at: http://www.ilo.org/empelm/pubs/WCMS_120382/lang--en/index.htm

International Organization(s) for Global Monitoring

This document was prepared based on inputs from International Labour Organization (ILO).

For focal point information for this indicator, please visit https://unstats.un.org/sdgs/dataContacts/

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