James Manyika

It shouldn't.

One of the things about productivity, right, is it's actually in some ways labor productivity is a very simple equation, right?

It has on the numerator value added output divided by hours worked or labor input, if you like.

So you can have what I think of as a virtuous version of productivity growth versus a vicious one.

So let me describe the virtuous one.

The virtuous one, which actually leads to job growth, is when in fact you expand the numerators.

In other words,

There's innovations, use of technology, the ways that I talked about before, that leads to companies and sectors creating more valuable output, more of it and more valuable output.

So you expand the numerator.

So if you do that and you expand the numerator much higher and faster than you're reducing the denominator, which is the labor hours worked,

you end up with a virtuous cycle in the sense that the economy grows, productivity grows, everything expands, the demand for work actually goes up.

And that's a virtuous cycle.

And the last time we saw a great version of that was actually in the late 90s.

This is, if you recall before that, Bob Sollard kind of framed what ended up being called the solar paradox, which is this idea that before the mid and late 90s, you saw computers everywhere except in the productivity figures.

Right.

And that's because we hadn't seen the kinds of deployment of technology, the managerial innovations do the kind of what I call the numerator driven productivity growth, which when it did happen in the mid to late 90s, you created this virtuous cycle.

Now, let me describe the vicious cycle, which is the

if you like the not so great version of productivity growth, is when you don't expand the numerator, but what you do is simply reduce the denominator.

So in other words, you reduce the hours worked.

In other words, you become very efficient at delivering the same output or maybe even less of the output.