Economic sciences/Workforce Management

4th course student Ismagulova K.А.

Research advisor: Candidate of Economic Sciences, Professor Dzhumambayev S.K.

Kazakh National University after al-Farabi, Kazakhstan

Problems of a correlation of labor productivity

and pay growth rate

In his message to the people of Kazakhstan "Kazakhstan way – 2050: Unique purpose, unique interests, unique future" RoK President Nursultan Nazarbayev set a target to increase a labor productivity in the country by 2050 5 fold, from the current 24.5 thousand USD to 126 thousand USD [1]. To regret, with a switch to the market relations a proper attention is not paid to a labor productivity growth in most of the entities: it is not analyzed, action items for further growth are not being developed and planned in the entities. While in many countries worldwide the increase of the labor productivity is regarded as a major source of the improved living standards.

To ensure that the economic policy leads to a growth of a gross domestic product, employment and pay level, the relevant correlations of the leading macro economic data shall be sustained. One of major macro economic ratios is a proportion between the labor productivity and pay growth rates. It is required to ensure the awareness that in normal economic conditions, maybe except for short-term periods, the maximum growth rates of pay and income should not exceeed the growth rates of labor productivity both in the entire economy and its specific area.

In Kazakhstan, according to the data of RoK Statistics Committee, the average monthly notional wages of one employee in 2013 increased by 7,561 tenge as compared to 2012 (from 101,079 to 108,640 tenge). The index of the notional wages in 2013 was 107.5, and the index of the actual wages was 101.6.

Per the data of RoK Statistics Committee, there hasn't been any drop in the notional wages for the past years. However, we may observe a decrease of the notional wages growth rate. For instance, in 2011 the growth rate index was 116.1, in 2012 - 112.4, and in 2013 - 107.5.

In its turn, the actual pay grows slowly. Its metrics are 107.2 in 2011, 106.9 in 2012 and 101.6 in 2013 [2].

It is obvious that the wages are amended annually but it should be confirmed whether such change affects the labor productivity or whether there is no link between these values.

The overall labor productivity index in the economy from 2000 to 2007 tended to grow. In the financial crisis years (2008 – 2009) a growth rate slowed down achieving 0 – 0.2 % respectively.  In 2013 as compared to 2012 the labor productivity growth was:

-overall in the economy – 104.9 %;

-on production of goods – 105.3 %;

-on provision of services – 104.3 % [2].

The highest labor productivity in Kazakhstan is noted in mineral production industry. Then comes a construction, hotel, restaurant and financial banking business. Agriculture is on the last spot. While for the past years in Kazakhstan there has been the preemptive growth of wages compared to the labor productivity.

The effect from the labor productivity growth is distributed into two parts one of which is used for increase of employee wages and the other for the expanded reproduction of means of production. The provided data suggest that in Kazakhstan the wages index exceeds the labor productivity index. Ideally a normal level of accumulation is achieved in case if 0.7-0.8% of wages growth falls within each per cent of the labor productivity growth. If at a growth of a labor productivity by 1% the wages increase over 0.8%, then the production accumulation will be restricted thus hindering the economic growth.

Though the growth rate of labor productivity and wages in Kazakhstan has a single focus, you can't tell about their mutual relation. The growth rates of these metrics significantly differ. In our country there is the preemptive growth of wages which is a nonsense for market economy. Such phenomenon does not promote a normal development of the country economy and may be a cause of its non-competitiveness.

Thus, in our country there is a need for overcome the preemptive growth of wages over labor productivity growth. Only this way we may ensure a consistence between the consumption and accumulation, between employee income growth and provision of goods and materials, create the required savings to expand the capital investments intended for new construction, renovation and revamping the existing production.

References

1. Official site of RoK President - Message of RoK President N.Nazarbayev to Kazakhstan people. 17 January 2014. - [Electronic resource] - Access mode. - URL: http://www.akorda.kz/ru/page/page_215750_poslanie-prezidenta-respubliki-kazakhstan-n-nazarbaeva-narodu-kazakhstana-17-yanvarya-2014-g

2. Official site of RoK Statistics Committee - [Electronic resource] - Access mode. - URL: http://stat.gov.kz/faces/homePage?_adf.ctrl-state=dlda6glsk_110&_afrLoop=23984116796606