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Nicolai Tangen knows a thing or two about productivity. He currently leads Norges Bank Investment Management, which manages the revenue of Norway’s oil and gas resources.
He’s been coined Norway’s “trillion-dollar man”, because of his management of immense wealth, as well as his own personal fortune.
Last week, Tangen stated publicly that he believes America’s assertive approach to staving off failure is helping propel the nation ahead of its European counterparts—where workers may have a better work-life balance, but in his words, aren’t as ambitious.
“There’s a difference in the general level of ambition,” he said, as reported by the FT. “We are not very ambitious. I should be careful about talking about work-life balance, but the Americans just work harder,” Tangen continued.
Undoubtedly, America is a nation in which hard work is prioritized and celebrated. Yet, is the nation truly the gold standard for productivity, especially when compared to its European counterparts? Let’s delve into the data, statistics, and nuances to uncover the truth behind this question.
Firstly, OECD data states that the U.S. is indeed a hub of productivity. Since the year 2000, labor productivity has increased 1.5 per cent per year. Output, or the amount of goods and services the economy produces, even increased faster than total hours worked.
In fact, from 2000 to 2022, U.S. workers produced about 60% more goods, and only increased their hours worked by ten per cent.
Yet, when we zoom out, this is a far more complex picture. When dissecting productivity on a country level, economists often turn to GDP per capita and hours worked as primary indicators. These metrics offer a glimpse into how efficiently each nation utilizes its workforce.
According to recent data from World Bank, Luxembourg actually emerges as the undisputed leader in productivity, boasting a staggering GDP per capita of $134,754 alongside relatively fewer hours worked annually.
Ireland follows closely, fuelled by a thriving multinational sector attracted by favorable tax rates. Notably, neither the United States nor any European nation dominates the top spots.
In fact, according to the European Union, in 2022 the average workweek of people between the ages of 22 and 65 was 37.5 hours. The longest working weeks recorded were in Greece at 41 hours a week, and Poland at 40.4 hours. By contrast, the Netherlands had the shortest working week of 33.2 hours, followed by Germany at 35.3 hours.
According to the International Labour Organization, America by comparison, clocked in at 38 hours a week. However, of those employees, 13% worked 49 hours or more per week, which outstripped the majority of European nations.
Yes, it’s true that America's reputation for a robust work ethic precedes it, with narratives of long hours and relentless pursuit of success ingrained in its cultural fabric. However, while Americans did indeed clock in substantial hours, averaging 1791 annually, the correlation between hours worked and productivity isn't so straightforward.
Countries like Denmark, Norway, and Sweden achieve admirable productivity with shorter workweeks, which perhaps speaks more to a balance between effort and wellbeing, and the importance of efficiency over mere labor input.
The issue extends beyond quantitative measures. Factors such as workplace satisfaction, employee wellbeing, and effective resource management contribute significantly to productivity.
Burnout and dissatisfaction, prevalent in nations with extended work hours, underscore the limitations of equating productivity solely with time spent on tasks.
Balancing work and life
Contrary to stereotypes of sluggishness, European nations prioritize work-life balance, a philosophy often perceived as antithetical to productivity, especially in the fast-paced western world.
Countries like Norway, Switzerland, and Denmark demonstrate that shorter workweeks need not compromise output. Instead, they prioritize employee satisfaction, leading to heightened productivity levels, according to data from the OECD and World Bank.
Investment in education, innovative management practices, and strategic resource allocation further bolster European productivity.
So, what does this tell us about the U.S.’ work ethic? Undoubtedly, Americans are hard working. And, it’s a nation of increasing professional success. However, something of a cultural shift is needed when considering the return on investment of long hours.
The correlation between hours invested versus productivity doesn’t weigh in the favour of those with the same opinion as Tangen. In fact, it seems that the most productive nations are the ones that balance this productivity with wellbeing.
The good news is that this shift is seemingly, slowly, taking place. As the data shows, the nation is gradually shifting to a more Nordic mindset when it comes to productivity versus time invested. Workers who are mindful not just of output, but also of wellbeing and work-life balance are undoubtedly happier and healthier, and as such, this is an encouraging direction of travel.
