THE RATIO OF THE DYNAMICS OF LABOR PRODUCTIVITY AND CAPITAL-LABOR RATIO AS AN INDICATOR OF OPTIMAL COORDINATION OF FIXED ASSETS AND THE NUMBER OF STAFF AT AN ENTERPRISE

Authors

DOI:

https://doi.org/10.15407/economyukr.2020.08.040

Keywords:

labor productivity; capital-labor ratio; return on assets; advance coefficient; revaluation of fixed assets

Abstract

Theoretically possible options for combining the dynamics of interrelated indicators of labor productivity, capital-labor ratio and return on assets at an enterprise are discussed. The positive and negative growth of capital-labor ratio from the point of view of its correlation with increase of labor productivity is studied. It is proved that the increase of capital-labor ratio can be considered as positive only in combination with an increase in return on assets. All other variants of growth (decrease) of capital-labor ratio should be considered as a negative phenomenon in the economy of an enterprise, industry or region.
The negative increase of capital-labor ratio in the industry of Ukraine in 2010–2018 is analyzed. During the studied period, the return on capital varied unstably, showing an erratic downward trend, and the relative rate of increase of capital-labor ratio of industry was 1.13 times faster than the same indicator of labor productivity dynamics. Thus, there was a non-optimal trend in the dynamics of capital-labor ratio in the industry of Ukraine in 2010–2018: its increase left behind the growth of labor productivity with a corresponding deterioration in the use of fixed assets.
The obtained conclusion is confirmed by modeling of the dynamics of sales, residual value of fixed assets and the average number of employees in the industry of Ukraine using the production function of Cobb-Douglas-Tinbergen. Another number of practical results are obtained according to the dynamics of economic activity of domestic enterprises of food industry and mechanical engineering. Models built on the basis of various production functions (all, without exception) show non-optimal capital-labor ratio due to the excessive value of the average annual value of fixed assets compared with the number of staff. It turned out that among the causes of this economic phenomenon the main one is the constantly growing fictitious surplus of fixed assets of enterprises, formed as a result of their overestimation, because, unlike the number of employees, fixed assets in the numerator of capital-labor ratio are expressed in cost units heavily influenced by inflation rate in the country.

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Published

30.08.2020

How to Cite

YANKOVYI, O., & YANKOVYI, V. (2020). THE RATIO OF THE DYNAMICS OF LABOR PRODUCTIVITY AND CAPITAL-LABOR RATIO AS AN INDICATOR OF OPTIMAL COORDINATION OF FIXED ASSETS AND THE NUMBER OF STAFF AT AN ENTERPRISE. Economy of Ukraine, 63(8 (705), 40–57. https://doi.org/10.15407/economyukr.2020.08.040

Issue

Section

Economic management: theory and practice