Insufficient industrial productivity

(Ref. 302)
Problem Components
Policy issue area: Economics
Policy issue: Productivity
Description: High cost of production, so that foreign competition cannot be met.
Symptoms: Substantial increases in imports; decline in the industrial sector (smokestack industries); widespread unemployment (20% decline in manufacturing jobs since 1979); unfavorable trade deficits.
Causes: Inadequate management; excessive wage demands; industrial policies of trading partners; lack of new economic development (high-tech industries, etc.); lack of a national economic policy.
Cost of problem: -
Solution Components
Resources: Business; industry; management; workers; science (R&D).
Goal: Pursue an industrial policy that stimulates economic growth to result in an annual increase of per capita real income by 3%.
Program area: Economic development
Program-remedy: 1. Industrial renewal policy -- Industrial Modernization Agreements, supported by a National Investment Program to channel pension fund assets
2. Restoring incentives for business to invest in productivity
3. Programs for increased management-labor cooperation -- worker participation in decision making; Employee Stock Ownership Plans (ESOPs)
4. Management and employee bonuses tied to productivity
5. National program to stimulate technologically advanced, customized and flexible production.
Program-prevent: 1. Strategic management
2. Human resources development through education system
3. Strengthened Job Training Partnership Act (JTPA)
4. More investment in scientific and engineering R&D
5. Fostering new high technology ventures by governmental coordination of industry and finance.
Cost of program: -
Beneficiaries: Business; management; workers; consumers.

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