Dabbawallahs, Productivity and Inflation

The efficiency of American workers rose in 2005 at the slowest pace since the recession year of 2001 while a key gauge of wage pressures rose at the fastest pace in five years, the government reported Thursday.

The Labor Department said productivity rose by 2.7 percent last year while labor costs rose by 2.4 percent, the biggest jump since a 4.2 percent increase in 2000. For just the final three months of the year, productivity actually fell by 0.6 percent, the first decline since early 2001, and labor costs rose by 2.4 percent. Productivity is considered the key factor determining American living standards. Rising productivity allows companies to pay their workers more without having to increase the cost of production, which would boost inflation.

So can productivity outpace wage increases? Either we improve the rate of productivity or ensure that we have plentiful supply of labour.

Over to the other side of the globe, in Mumbai, we can draw inspiration from the tiffin deliverymen. They help feed hungry office workers based on an antiquated but effective system with a 99.99 percent accuracy delivering 200,000 lunch boxes by 5,000 deliverymen to offices in the city daily. That is 1 error in 10,000 transactions.

So creativity is very much alive - and if such value innovation is constantly applied we are for the better at the end of the day. Inflation, that can be exported by the US economy and is not a prospect we cherish, can also be kept at bay.

Keywords: Mumbai, productivity, inflation, dabbawallahs