tag:blogger.com,1999:blog-11110174.post433307222855879354..comments2024-02-26T23:17:11.132+13:00Comments on Blessed Economist: Markets and Wages (7)Ron McKhttp://www.blogger.com/profile/03989126812730583009noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-11110174.post-15528445804376358072013-05-25T20:56:45.604+12:002013-05-25T20:56:45.604+12:00No Brendan, it is much harder than you realise.
E...No Brendan, it is much harder than you realise.<br /><br />Employers like to think they can measure productivity, because it makes them feel better, but it is an illusion.<br /><br />Employers and managers can assess relative productivity, by comparing different employees, but that is not sufficient for the purpose here. To pay employees according their productivity, the employer/manager must be able to assess the absolute value of their productivity, ie the contribution of the individual to the firms in dollar terms.<br /><br />If an employee works on their own without any equipment on a single product, it is theoretically possible to measure the market value of what they have produced. However, that situation hardly ever occurs in a developed economy. If an employee works as part of a team, on producing a variety products, with the assistance of capital equipment, it is logically impossible to measure the value of what the individual employee has produced. The market value of the production can be measured, but there is no way to allocate it between capital equipment and labour, or to allocate the labour share between various employees.<br /><br />Most employers simply do not try to measure the contribution that each individual employee makes to the business, because it is an impossible task. Therefore, they cannot be sure that they have paid the employee according to their productivity.<br />Ron McKhttps://www.blogger.com/profile/03989126812730583009noreply@blogger.comtag:blogger.com,1999:blog-11110174.post-63510428215179498212013-05-25T17:11:00.937+12:002013-05-25T17:11:00.937+12:00Hi Ron
Some good thoughts here.
A couple of re...Hi Ron<br /><br />Some good thoughts here. <br /><br />A couple of reflections. I suspect it's easier for an employer to determine and individual's productivity than you suggest. Most employers measure employee productivity one way or another.<br /><br />You seem to ignore the fact that employees are mobile, and well able to leave the employment of a company where they feel inadequately rewarded or appreciated. They are not held captive to bad employers. <br /><br />Brendan McNeillhttps://www.blogger.com/profile/02741263914308842497noreply@blogger.com