The desegregation of output into sectors allows for sector estimates of labour productivity. Multifactor productivity was not estimated due to the lack of capital stock estimates. The labour productivity that could be estimated here is value added per worker. The absolute number of labour used is shown in table 8. The information was collected by occupation statistics for the censuses of 1921 and 1931; the occupation statistics for 1938 are the log-linearly interpolated results of the Cypriot census of 1946 and of the Maltese census of 1948. Some corrections were necessary, thus altering the occupation results presented in the censuses. The occupations were re-classified in order to fit the correct definition of what constituted primary, secondary and tertiary sector. In addition those who were classified as labourers were assigned to the manufacturing and construction sector, since in the 1921 census labourers were defined as belonging to that sector. As a result there can be no distinction between construction and manufacturing and the labour productivity is given for the combined secondary sector.
Some additional alterations of the census result were needed to correct known underreporting in the occupation data. Women employed in agriculture were revised upwards in order to take into account the known underreporting in Agriculture.
22 Table7: Labour force, Malta and Cyprus, 1921-1938.
Malta Total Labour
Sources: Percival, Census...1946 (1947); Hart-Davis, Cyprus…1931 (1932); Hart-Davis, Cyprus...1921 (1922); Malta, Eleventh Census...1948 (1949); Malta, Census...1931 (1932) Malta, Census...1921 (1922)
Labour productivity was estimated by dividing the sector output by the number of employed persons in that sector10. However, due to problems in the numbers of persons employed, the labour productivity estimates shown in table 8 are less robust than the GDP results and need to be treated cautiously.
Table 8: GDP per employee (Labour Productivity), Cyprus and Malta, 1921-1938
Cyprus Malta
1921 1931 1938 1921 1931 1938
Agriculture, Forestry and
Fishing 20.1 23.0 26.0 Agriculture, Forestry and
Fishing 13.3 20.4 23.0
Mining & Quarrying 70.2 109.0 119.5 Mining & Quarrying 26.7 68.1 98.0 Manufacturing, Handicraft,
Construction and Utilities 58.9 61.3 83.6 Manufacturing, Handicraft
Construction and Utilities 61.4 89.2 98.0
Services 113.8 109.2 93.5 Services 72.7 86.3 91.5
Total Output Per Worker 40.2 44.8 56.9 Total Output Per Worker 50.6 68.5 75.8 Note: The implied rental income from housing was removed from the GDP before calculating productivity. In constant 1938, PPP, pounds sterling.
Source: Appendix B (PPP adjusted), Appendix C; Table 3.14.
Bearing in mind the limitations, labour productivity growth in Cyprus and Malta was quite significant during the interwar period: GDP per employee grew by 2.4% per annum in Malta and by 2.1% in Cyprus during the period 1921-1938. However, as the estimate does not account for of possible increases of working hours, then part of the growth of GDP per worker may be due to an increase in the average hours worked.
The slower growth of Cypriot productivity was due to the problems facing Cypriot agriculture, which prevented it from becoming as productive as it could have been. The lack of progress in Cypriot agriculture can be seen by the fact that by 1938, Maltese farmers were more productive than Cypriots, despite the inherent advantages of farming in Cyprus. The dynamic growth of mining in Cyprus was not just a phenomenon in terms of output: mining was also becoming very productive, overtaking the service sector as
10A better way of estimating productivity would be taking into account the number of hours worked. However, this is not possible since there were a lot of people employed in other sectors who were also part time farmers. Since the number of hours worked in each sector is unknown, productivity estimates per labour provide us with better estimates.
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the most productive industry. The secondary sector‟s productivity grew substantially during the interwar period, yet it is not possible to see if such advances took place in the manufacturing or the construction industry as the number of workers working in construction could not be separated. The decline in the service sector productivity in Cyprus is in part due to the estimation method of service output, since a great deal of service value added was estimated using constant productivity assumptions; however it is possible that the rural unemployed and underemployed who were facing the agricultural crisis entered in low productivity service work in order to make a living, thus reducing the productivity of the sector (Eletheria, 1927).
Table 9 multiplies the growth rate of each sector by its initial share of GDP in order to quantify the relative contribution to economic growth. It confirms that the mining sector was pivotal in Cypriot growth, both in the 1920s and in the 1930s. However, it also indicates how in the 1920s the tertiary and secondary sectors, as well as the agricultural industry, were more important: despite growing more slowly than mining, their large share to GDP meant that their contribution was more significant. This changed in the 1930s: mining grew even faster and agriculture stagnated, dragging Cypriot growth downwards. If Cypriot agriculture would have managed to perform marginally better in the 1930s, the overall growth rate of Cyprus would be much more rapid. On the other hand, Maltese growth was centred on the service and the manufacturing sectors, but it was the slowdown of the service sector that led to the slowdown of GDP in the 1930s.
Table 9: Relative contributions to growth (%), Cyprus and Malta, Peak-to-Peak
Malta
GDP growth
per annum Agriculture Mining
Manufacturing, Handicrafts, Utilities and
Construction Service
1925-1937 1.88 0.05 0.06 0.84 0.91
1925-1929 1.91 0.27 0.22 0.56 0.82
1929-1937 1.86 -0.07 -0.01 0.97 0.93
Cyprus
GDP growth
per annum Agriculture Mining
Manufacturing, Handicrafts Utilities and
Construction Service
1925-1937 3.0 0.16 0.62 0.87 0.91
1925-1929 4.6 0.91 0.87 0.92 1.69
1929-1937 2.3 -0.20 0.83 0.81 0.52
Note: Measurement for all sectors from peak to peak in GDP Source:Appendix B (PPP adjusted), Appendix C.
Shift share analysis of labour productivity allows us to make some first estimates of the impact of structural change on productivity growth. The results are indicative rather than definitive due to the problems of labour productivity described above, but serve to highlight what underpinned growth in Cyprus and Malta. The methodology used is the same as in Fagerberg (2000), where growth in aggregate output per worker is
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decomposed into three elements, with the „residual‟ being given an explicitly economic interpretation. The increase in total productivity is broken down in sectors and into the sector shares of the labour force in order to isolate three effects: