Wages, Productivity, and Industrialization in Puerto Rico

Wages, Productivity, and Industrialization in Puerto Rico

Wages, Productivity, and Industrialization in Puerto Rico

Wages, Productivity, and Industrialization in Puerto Rico

Excerpt

This volume consists of three related essays, with a common focus on the new manufacturing economy which has developed in Puerto Rico since 1945. Readers will doubtless be interested in different parts of the book for different purposes. Those who wish a brief conspectus of the findings might well begin with Chapter 10.

Part One examines the development of the modern manufacturing sector against the background of the economy as a whole. We pay particular attention to the sharp rise in real wage levels in the face of a continuing labor surplus, and to the way in which wage increases were absorbed by manufacturing enterprises. One would expect rapid wage increases to have retarded the expansion of industrial employment, and we have tried to estimate the magnitude of this effect. A paradox of the Puerto Rican economy is that, while there has been great progress in raising real wage rates and living standards, there has been only modest progress in reducing unemployment.

Part Two focuses on the characteristics and policies of the new industrial managers in Puerto Rico. The raw material for this Part comes from field investigation of 85 manufacturing establishments. The field work was done during 1954 and 1955, at which time many of these establishments had been operating only for a year or two. The material is dated in the sense that management policies in Puerto Rico today differ substantially from those of a decade ago. But it is contemporary in the sense of representing a slice of experience during the first few years of industrialization, and thus of possible relevance to other countries embarking on industrial development. Among other things, this Part demonstrates how easy it is, in the face of cheap and abundant labor, to develop inefficient practices and to achieve low productivity even with modern production equipment. We document the kinds of inefficiency which were widely prevalent in the early years, and the lines along which efficiency was subsequently increased under pressure of rising wage levels.

Part Three examines the characteristics and behavior of the new factory labor force: who these people were in terms of personal characteristics and employment background; their mobility record and labor market behavior; the preference systems underlying their job . . .

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