Productivity. It's one of those rare concepts on which there is broad-based consensus. Whether you're a policymaker, a hard-nosed investor, corporate executive or just having a discussion with your friends about what is needed for a better future. Yes, we all agree that productivity is a good thing and a worthwhile goal, that raising productivity is key to unlocking future prosperity, growth and competitiveness.
Interestingly, this is true at all levels of economic life: the individual level, the company level, all the way up to the national economy. Yet while we agree that productivity is key to success, there is tremendous disagreement, debate and confusion about how exactly higher productivity can be achieved. All over the world, and increasingly in Japan, a growing industry of advisers, consultants and coaches thrives on giving productivity advice, each pushing their proven and sometimes patented method on how we can become more productive. The spectrum goes all the way from proven tricks and protocols — how to raise efficiency of corporate meetings, boost customer throughput and accelerate production output — to how you can lead a more productive personal life. So yes, productivity is good; but it's also very complicated.
Economists are often ridiculed for making simple things complex, for hardly ever giving a straightforward answer. "On the one hand it's like this, on the other hand it's like that" is the often-quoted stereotype. So you may be surprised that on the issue of productivity in general, how to raise productivity in particular, macroeconomics offers a very simple and straightforward answer: If you want to raise productivity there is one thing you must do — raise wages.