Companies controlled by foreign parent company generate higher labour productivity

19/11/2009 15:00

The average labour productivity of Dutch companies in foreign hands is significantly higher compared to domestically-owned companies. The value added of companies controlled by a foreign parent company approximates 90 thousand euro per employee, as against over 54 thousand euro for domestically-owned companies.

Large differences with respect to productivity

There are large differences in labour productivity between the countries of origin of the foreign owner. With 117.3 thousand euro, productivity is highest, if the parent company is based in North America (USA and Canada), followed by the United Kingdom with an average of 102.0 thousand euro. The average for the EU countries is 82.8 thousand euro and 77.1 thousand euro for the rest of the world.

The main reason for the differences in labour productivity is that foreign companies tend to concentrate their staff and researchers in their main office. As a consequence, companies under foreign control appear to generate more output.

Labour productivity per employee by main office location of the parent company, 2007

Labour productivity per employee by main office location of the parent company, 2007

Differences per sector

The highest labour productivity is recorded in the production industry, because the production industry includes many capital-intensive activities, e.g. oil refineries and power stations. North America-based production companies attain a value added per employee of 168.3 thousand euro, twice as much as production companies based in the Netherlands.

Labour productivity of Dutch companies controlled by a North American parent company is so high, because they are generally larger than other foreign companies. Their sheer size gives them an advantage.

In other sectors, North American companies also have a higher labour productivity due to their size. The sector letting of and trade in real estate, letting of moveable property and commercial services, where the added value per employee ((46.4 thousand euro) is almost equal to the Dutch value added ((46.0 thousand euro) constitutes an exception. The value is relatively low, because these sectors employ many part-timers. As a result, labour productivity per employee is reduced.

Labour productivity per employee by region and sector, 2007

Labour productivity per employee by region and sector, 2007

Hub Beunen and Maartje Kessels