Productivity, a measure of value added to a product per person employed, is one of the key components considered by companies when choosing where to locate their manufacturing operations.

It is a measure of how efficient a company is in leveraging the skills of its workers.

The bi-annual global ranking of productivity by the International Labour Organisation (ILO), published this month, is also a standard companies can use to compare their operating efficiency with their peers.

The ILO report indicates that the US continues to lead the world by far in labour productivity per person employed in 2006.

The US had a US$63,885 on average of value added per person employed in 2006, followed by Ireland (US$ 55,986), Luxembourg (US$55,641), Belgium (US$55,235) and France (US$54,609).

When measured as value added per hour worked, Norway has the highest labour productivity level (US$37.99), followed by the US (US$35.63) and France (US$35.08).

In general productivity levels have increased worldwide over the past decade, but gaps remain wide between industrialised regions and most others.

The ILO noted that he productivity gap between the US and most other developed economies continued to widen. In the US productivity growth has accelerated, outpacing gains made by many other developed economies.

The difference is partially explained by the fact that Americans work more hours per year than their counterparts in most other developed economies.

The average annual rate of productivity growth in the US was 1.7 per cent between 1980 and 2005, whether measured in terms of total hours worked or per hour.

Meanwhile Ireland's annual rise in output per worker over the same period was 3.1 per cent when based on total hours per worker each year and 3.8 per cent measured per hour.

The UK had a productivity growth of 2.1 per cent per worker and 2.4 per cent per hour. For France, productivity rose 1.5 per cent per year, and 2.2 per cent growth in output per hour.

In Germany the rises were 1.4 per cent and 1.8 per cent respectively. Italy had growth of 1.1 per cent and 1.4 per cent, and Japan registered 1.8 per cent and 2.5 per cent growth.

Other regions are starting to catch up, notably South Asia, East Asia, non-EU countries in Central and South-Eastern Europe, and the former members of the Soviet bloc, the ILO stated.

In East Asia, workers now produce twice as much as they did 10 years ago.

Among the developed countries, countries in Western Europe and Japan managed to make long-term productivity improvements, the ILO stated.

In Ireland the productivity gap with the US has declined steadily, from almost 40 percentage points in 1980 to less than 13 points in 2006.

Since 2000 Finland, Sweden and the UK have been were also able to continue reducing their productivity gaps with the US. Estonia, Latvia and Lithuania , new members of the EU, have also managed to lower the productivity gap with the US.

Labour productivity declined from 1980 to 2005 in half of the countries in Latin America and the Pacific and increased only slightly in the remaining countries.

An increase in productivity is mainly the result of firms better combining capital, labour and technology, according to the ILO. A lack of investment in training and skills, as well as equipment and technology can lead to an underutilisation of labour potential, said ILO director-general Juan Somavia.

"The huge gap in productivity and wealth is cause for great concern," Somavia stated. "Raising the productivity levels of workers on the lowest incomes in the poorest countries is the key to reducing the enormous decent work deficits in the world."

The ILO measures labour productivity for the aggregate economy, manufacturing, transport and communication, trade - including sales and repairs of motor vehicles, wholesale, retail, hotels and restaurants - and agriculture, forestry and fisheries.

Productivity represents the amount of output per unit of input.

Labour productivity growth may be due to either increased efficiency in the use of labour, without more of other inputs, or because each worker works with more of the other inputs, such as physical capital, human capital or intermediate inputs, the ILO stated.