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Questioning Inefficiency: Why Is Russia's Productivity So Low? - SPIEGEL ONLINE - News - International

Russian Companies are still among the least productive in the industrial world, but the downturn could provide a catalyst for big improvement.

On the face of it, Russia's economic performance over recent years has been impressive. But today, amid plummeting gross domestic product and sharp falls in industrial production, there's a new awareness that Russia's economy is also beset by deep-seated problems. Despite almost two decades of market reforms, the country's labor productivity, a key indicator of overall economic efficiency, remains one of the lowest among industrialized nations. Several studies have been published recently underscoring the scale of the problem.

 This steel factory in Novokuznetsk, Russia has been forced to reduce hours and salaries. According to one of the studies, by Strategy Partners, a Moscow management consultancy, Russia's average labor productivity is just 17 percent of the US level. The amount varies by sector, from a low of 6 percent in machine building to a high of 22 percent in the natural resource industries. But the room for improvement is colossal everywhere. "If, in Russia, a mere 10 percent of workers had the same level of productivity as in the US, Russia's GDP would increase by one and a half times," notes Alexander Idrisov, managing partner of Strategy Partners.

by Fran on Mon May 11th, 2009 at 02:25:14 PM EST
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