Article

 

DIVISION OF LABOUR, PRODUCTIVITY, AND COMPETITIVENESS OF THE GREEK TRADABLE SECTOR (p.157-184)

by

Dimitris PAITARIDIS, INSTITUTE OF LABOUR (INE GSEE)

Keywords : Productivity, Division of Labour, Tradable Sector, Competitiveness, Profit Margin

JEL classification : D24, E24, J31, O24

Abstract

This article compares the evolution of productivity for the domestic tradable sector vis-à-vis the Eurozone countries and its impact on cost competitiveness, during the period 2000-2014. In particular, we track for possible changes into the domestic division of labour that might have favoured low-productivity industries exerting a negative impact on the cost/price competitiveness. However we must point out that the cost advantage does not depend only on the labour cost, but it is also the profit margin that determines the final price of goods and services. For that reason we also compare the evolution of profit margin between the domestic and the Eurozone tradable sector in order to ascertain if there are any cost disadvantages due to excessive profitability of Greek enterprises. Our results indicate that in the case of the tradable sector, the greatest part of the productivity divergence is attributed to differences in intra-industry productivities and not to a less favoured division of labour. These differences in intra-industry productivity are the main cause for the modest decrease in unit labour cost despite the major decline in the nominal unit wage that was imposed by the austerity policies. Finally, the profit margin of the tradable sector exhibits an increase during the crisis period which possibly undermines cost competitiveness.