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by S.M.J. Neangoda

Productivity promotion and quality improvement has to be considered as part of the strategy for rapid economic development. Productivity improvement in industry, agriculture and commerce involving the efficient and effective utilisation of existing resources in producing goods and services also requires technology upgradation, including technology transfer, creativity and innovation, research and development, management of change and information technology. Improvement of the quality and attitudes of human resources and labour management co-operation are vital for productivity improvement and thus the contribution to economic development.

To direct the country towards the path of economic recovery, avoiding the so-called poverty trap or the vicious cycle of poverty, a three pronged approach has to be adopted. These approaches will include the adoption of macro-economic and fiscal measures to encourage investment, both by the private sector and the government at macro level and improvement of productivity, quality and total production at micro level.

To attain success in the pursuit of these approaches, concerted action on the part of stake-holders, namely, the government, employers, employees including trade unions and consumers have to play a vital role. This article also attempts to draw inspiration from a few selected countries whose approaches to economic development have been successful. In Sri Lanka too a concerted effort and a joint approach could be undertaken to create the best social and economic environment to live in and work and increase national output by optimum contribution of effort, for the greater good of the greatest number.

History shows that manipulation of the banking mechanism alone will not be sufficient to place new purchasing power in circulation. Expansion of public works and the use of the monetary mechanism are dual approaches to increase employment. Expansion of credit to industry will be accompanied by an increase in employment. The high rates of interest that is currently in existence is a discouragement of industrial enterprise and is an intensification of unemployment.

Government expenditure is the most useful means of increasing employment by spending money on consumption, or investment in projects. Employment also depends on income and as such an increase in employment can come about from an increase in income. An increase income depends on an increase in consumption plus investment, together with government expenditure.

Consumption can increase by two means, by taxation on higher incomes or by investment of which the latter is preferred. Investment is dependent on the rate of interest. More investment will be forthcoming if the money needed to carry out projects could be borrowed cheaply.

Raising the propensity to consume through progressive taxation, enhanced public investment in infrastructure and lowering the interest rates to encourage investment in industry and agricultural enterprises, modernising and infusing technology to improve overall production efficiency and productivity are the main approaches that should be followed. Interest rates particularly, should be maintained at a level compatible with the maintenance of a high level of employment.

Business confidence is a tremendous lever in enhancing business activity. However due to adverse pronouncements and doomsday prognostications by different sectors, business confidence has been seriously affected, as such new investments have also been adversely affected and under the current environment a morale booster is necessary to get the wheels of industry and commerce back on the track.

Liquidity preference is a another phenomena observed due to the feeling of uncertainty which had been prevalent for some time, which is fast changing and the climate is suitable for a major economic development thrust.

Understanding productivity

Improved productivity can be achieved by infusing new techniques and utilizing resources more effectively, to produce improved results. It can also mean the ratio of production output to resources input or output divided by input. When a larger output has been obtained by the same input or the same output is obtained by less input it can be said that higher productivity has been achieved. Productivity indicates the degree of effective utilisation of production elements. What is meant by input are labour, raw materials, machinery, energy and capital.

The output resulting from the use of inputs are the resulting products. Actually it is productivity improvement that enables an organisation to make profits, achieve a competitive edge nationally and internationally, expand, ensure continuity as well as accept social responsibility. At macro level overall commitment to achieving productivity improvement will ensure desirable results for the country as a whole. Indeed, labour productivity is the most important means of measuring productivity improvement.

Labour productivity can be increased in several ways; by increasing the value added ratio by selection of products with a higher value added and reducing material cost by using value engineering techniques, product development, utilisation of new materials and value analysis. Further, by the use of more efficient and labour saving machines, productivity can be increased. Full utilisation of machines by elimination of non productive time by the introduction of improved managerial techniques is also vital. Further, elimination of idle time due to machinery breakdowns and avoiding waiting time for materials is also an important contributory factor in improving productivity.

The continuous pursuit of higher productivity by Japanese Industry has been facilitated by the implementation of such techniques as 5s practice or good house keeping, Kaizen concept or continuous improvement of process with people involvement, just in time concept for reduction of cycle time and inventory and proper maintenance or total production maintenance.

The adoption of some of these techniques by Sri Lankan industry will go a long way in productivity and quality enhancement. The practice of kaizen or 'changing for better' aims at achieving improved results and can be applied to any economic activity. The objectives of kaizen being to work easily, without extra effort in a better and safer manner, producing better quality products faster and at lower cost. In pursuing the above objectives it is possible to eliminate processes or duplication of activities, combine activities, rearrange and simplify and still obtain the desired results.

Elimination of unproductive activities and elimination of waste is possible in every sector. In addition to the industrial sector, if activities taking place in our government departments can be considered on these lines, the efficiency could be greatly enhanced for the benefit of the public in particular.

Quality management

The definition of quality was to 'meet specifications'. However today quality means customer satisfaction. Introduction of quality consciousness to Japan sees its origin in the Untied States, in that. The Japanese were inspired by two American practitioners, Dr. W. Edwards Deming and Dr. Joseph Juran, who provided an impetuous to total quality management.

Indeed, Dr. Deming is considered as the father of the Japanese quality revolution and is considered to have contributed significantly to the economic miracle in Japan.

Through meticulous adherence to quality during the last three decades Japan has earned an international reputation for the manufacture of high quality cars, electronic and industrial goods which were originally modeled on American and European products. From component failures that were common initially, changes have been brought about in the quality of products to earn the well deserved reputation for satisfying customers with excellence.

Japanese factories now use the most dependable latest technologies, often surpassing levels currently extant in the very nations from which the original ideas were adopted. Today management of quality has been given very high priority in order to compete in the world markets, while satisfying high customer expectations.

Total quality management is a must for survival, and commitment to quality at every level of industry, beginning with top management has to be emphasized. The objective of TQM is to increase the awareness of employees, that quality is vital to the organisations success and their betterment in the future. Through this process, the transformation of a business to provide value to customers and satisfying their needs is ensured. It is the new concept of total quality management as applied by the management that has enabled them to penetrate the Western markets in such items as motor cars and electronic consumer goods. The Japanese example is now followed by countries like Taiwan, Korea, Singapore, Indonesia and Malaysia.

Productivity improvement

It is important to ensure that wage rates are kept stable while production has to be improved to cushion the impact of inflationary pressure. Though there is clamour for increase in wage rates in several sectors, including the plantation sector in the midst of a near recession induced by global phenomena, as well as war expenditure and debt serving, a rise in wage rates would increase costs to an uneconomic level. Losing the competitive edge in international markets would be inevitable in such a situation with adverse effects on the economy. Indeed the disadvantages of higher wages could be offset by a measure of welfarism or social welfare.

As far as trade unions are concerned, a clamour for high wages without a reciprocal increase in production as well as productivity improvement will only cause chaos. Employers and employees, both being stake holders should ensure the viability of organisations as the prime objective. Gain sharing could then be considered, once the industries are back on their feet.

Indeed an alternative to an increase in money wages is better management and increased output, when considered from a marco economic point of view. This will have the effect of an overall price reduction.

The escape from inflationary conditions resulting in high cost is only possible by an increase in output by enabling each individual or employee to produce more efficiently by improved management techniques, by new methods and use of new technology and machinery. It must be stressed that the burden of high prices can only be reduced by increasing output and improving quality of goods. This requires a high level of commitment on the part of the employers, employees, unions and by far the government.

Considering the predicament faced by the country as a whole, trade unions representing the working class could voluntarily accept a moratorium on industrial action in the pursuit of higher wage rates for a period of at least three years, until the economy stabilises with a lesser level of inflation, offset by higher production enhanced productivity and improved quality.

It is recognised that any society that tolerates unemployment fails to produce the goods and services of which the society is capable of and denies the dignity of the individual as well as self realisation of personality. Adoption of measures to eradicate unemployment and proceeding more towards equitable distribution of income would be in the best interest of the nation.

If we subscribe to the theory that full utilisation of existing capacity contributes to improved profitability and thus in the interest of labour and management then, the norms that had been currently fixed through collective bargaining have to be seriously considered. Where low norms have been fixed which can be attained before the stipulated working hours have elapsed, the resultant loss of production can be considerable. This is considered pernicious when the norms are achieved very early and over time is paid for work after normal working hours. Increase in production has indeed to be compensated through a gain sharing scheme.

As far as trade unions are concerned, a clamour for higher wages, without a reciprocal increase in production as well as productivity improvement, will only cause chaos. Employers and employees, both being stake-holders, should ensure the viability of organisations as the prime objective. Gain sharing could then be considered, once the industries are back on their feet. Indeed an alternative to an increase in money wages is better management and increased output, when considered from a marco economic point of view. This will have the effect of an overall price reduction.

The escape from inflationary conditions resulting in high cost is only possible by an increase in output by enabling each individual or employee to produce more efficiently by improved management techniques, by new methods and use of new technology and machinery. It must be stressed that the burden of high prices can only be reduced by increasing output and improving quality of goods. This requires a high level of commitment on the part of the employers, employees, unions and by far the government. In other words, the onus rests on every citizen to work smarter to contribute the maximum to the extra production effort needed currently.

Considering the predicament faced by the country as a whole it may not be unfair to request trade unions representing the working class to voluntarily accept the moratorium on industrial action in the pursuit of higher wage rates for a period of at least three years until the economy stabilises with a lesser level of inflation off set by higher production, enhanced productivity and improved quality.

It is recognised that any society that tolerates unemployment fails to produce the goods and services of which the society is capable of and denies the dignity of the individual as well as self realisation personality adopting measures to eradicate unemployment and proceeding more towards equitable distribution of income would be in the best interest of the nation. Economic development can take place only in a stable political environment where the leadership is patriotically motivated and united in the pursuit of national objectives.

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