Productivity IV: Labour Productivity by Sector - Addendum

The recently posted article Productivity IV: Labour Productivity by Sector revealed some disturbing findings. Eurostat data suggested that (Dutch and Belgian) large enterprises seemed less productive than medium sized enterprises in the (aggregate) Business Economy (Sectors [B-N, excl. K, incl S95]) in 2022. This phenomenon of “diseconomies of scale” was mainly due to the (large) sectors [F] Construction, [G] Wholesale and retail trade, [H] Transportation and storage, and [N] Renting and other business support.

Recent Statistics Netherlands (CBS.nl) data demonstrate that the apparent labour productivity per employed person (ALP_ep) in 2022 seems to show a maximum at medium sized enterprises, but far less pronounced than the Eurostat data. However, the effect disappears when ALP_fte) in 2022 is considered, except for enterprises with 250-499 employed persons.

The maximum at medium-sized companies disappears almost entirely for both ALP_ep and ALP_fte in 2023, as figure IV.9 shows, except for a small decrease in ALP_ep for company sizes from 250 to 499 employed persons to company sizes from 500 employed persons or more. This maximum disappears for ALP_fte, suggesting that the largest companies (500+ employed persons) employ more part-timers.

Above analysis confirms an earlier statement in Productivity IV: Labour Productivity by Sector that the productivity indicator ALP_fte is more reliable than ALP_ep, but this information is not always available. For instance, the Eurostat Business Statistics Databases do not offer full-time equivalents for employed persons (but do for employees).

This relatively new information on the year 2023 suggests that the phenomenon of "diseconomies of scale" in the year 2022 may have been the aftermath of the Covid-19 crisis. Perhaps, large enterprises in the above mentioned economic activities needed more time to adjust to the post-covid era than their smaller peers.