Productivity and working conditions

The relationship between productivity and decent work is a key factor in discussions on improving living standards and economic growth. Productivity growth and decent work are linked, although the nature of this link is complex. Productivity and decent work are also connected at the MSME level. For workers, increased productivity can lead to improved working conditions, including higher wages, reduced work hours, better safety and health at work and access to social protection, although the linkages are not automatic and depend crucially on the strength of labour market institutions such as collective bargaining. Improved working conditions, such as reduced work hours 6 and higher pay, in turn contribute to productivity growth. For enterprises, productivity gains lead to lower unit costs of production, which increases profits. When reduced costs are reflected in lower pricing, this benefits consumers and can strengthen enterprises’ market position. Finally, enterprises that offer better than average jobs and that invest in the skills and the long-term retention and welfare of their workers also achieve higher-than-average productivity.

The MSME Branch works to strengthen the triple nexus of higher productivity, better jobs, and environmental sustainability. The Productivity Ecosystems for Decent Work is a systemic approach that identifies and addresses root causes to low productivity and decent work deficits across enterprise, sector, and macro-economic levels. This is complemented by the Sustaining Competitive and Responsible Enterprises (SCORE) Programme, which strengthens workplace cooperation, productivity, and environmental sustainability in MSMEs through training and consulting services.