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OCR for page 189
Appendix B
Productivity and Absenteeism
This appendix examines the effects of unexpected absenteeism on
redundant employment. As an explanation of productivity differ-
entials, absenteeism may have two effects. First, where a pool of
relief workers must be carried to cover for unexpected absences,
some redundancy is likely to be experienced. The extent of this
effect depends critically on the variation in the daily absenteeism
rate. Second, fill-in workers may be less familiar with the
absentees' jobs or not as effective in the affected work group.
G iven the nature of the jobs and the organization of work,
however, industry sources generally view work disruption as a
minor factor, with redundancy in the relief pool of much greater
importance.
Table B.1 presents an analysis of absenteeism and productivity
In the auto industry using data averaged over several firms and
establishments. Before discussing the approach and results it must
be stressed that we have focused on the impact of absence on
labor hours per vehicle. Absenteeism will have an additional
effect on costs through the fringe benefits that are paid to
absentees. Even though straight-time wages are not paid to those
absent, fringe benefits tend to be unrelated to hours worked and
thus are paid irrespective of the number of days of absence. This
effect has been captured in the employee cost per hour used in our
earlier calculations.
The absenteeism analysis in Table B. 1 assumes that only
unexpected or unplanned absences are relevant to estimation of
redundant labor hours. Time away from work that is predictable
can be planned for so that no redundancy occurs. In the case of
planned absence, only the effects of disruption in work groups or
job unfamiliarity are relevant; we assume these effects to be
relatively negligible. Using industry-wide data we estimate that
unexpected, unplanned absenteeism averages 3-6 percent. The
lower bound is obtained by counting only "absent without notice"
as unplanned, while including all short-term absence yields the
189
OCR for page 190
190
TABLE B.1 Absenteeism and Productivity: U.S.-Japanese Differences
Category
United
Statesa Japan
Absenteeism (percentage of employed hours)
Absent without notice
Medical
Personal
Other bury duty, etc.)
Total
3.0
1.0
1.8
0.6
Redundant Labor Hours Relief Pool
Average unplanned absenteeismb (percentage) 4.5
Peak unplanned absenteeism (percentage) 11.25
Average redundancy (percentage of employed hours) 6.75
Productivity Impact
Labor hours per vehicles
Absenteeism effect if U.S. redundancy drops to zero
(hours per vehicle)
Absenteeism effect if U.S. redundancy drops to Japanese
level (hours per vehicle)
N/A
N/A
N/A
N/A
0.5-1.0
0.75
1.9
1.15
82.0 53.0
5.5
4.6
a U.S. estimates are approximate industry averages based on data from panel members;
Japanese estimates based on data from panel members.
b This assumes some of the medical, personal, and other absenteeism is planned.
c Assumes all absenteeism occurs on Monday and Friday; thus, 4.5 = (2/5 x%), where x%
is the Monday (Friday) rate.
~ For a small car, based on Ford and Toyo Kogyo estimates in Table A.3 in this volume.
upper bound; we use the midrange of 4.5 percent in subsequent
calculations.
Even though the average is something like 4.5 percent, varia-
tion above the average may influence staffing decisions. To
estimate an upper bound on the effect of absenteeism, we assume
that all unplanned absence occurs on Monday and Friday. With no
absenteeism in midweek, Monday and Friday will average 11.25
percent t(4.5 x 5~/0.24. If we assume that the relief pool is staffed
to the peak, then on average there will be 6.75 percent redundant
hours of work (11.25 - 4.5~. In other words, plants must hire 6.75
percent more labor hours than they actually need to produce a
given level of output, simply to cover for unplanned absence.
What impact does this have on hours per vehicle? Using the
Ford estimates for a small vehicle from Table A.3, the analysis
implies that unplanned absence accounts for 5.5 hours per vehicle.
This amounts to almost 20 percent of the estimated Ford-Toyo
Kogyo productivity gap.
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191
There are several reasons to suppose that 5.5 hours is an over-
estimate of the true value. In the first place we have implicitly
assumed that the relief pool must be hired for a full week, even
though they work for only two days. The fact that some unplanned
absence occurs on Tuesday, Wednesday, and Thursday would lower
the redundancy estimate somewhat. Moreover, there is some
evidence that production managers make use of short-ter m
employees to cover 1- to 2-day shortages, without having to add
them to the relief pool on the other days. There is also the
obvious point that we have assumed that the Japanese producers
have no unplanned absenteeism, when in fact industry sources
suggest that the actual rate is likely to range from 0.5 to 1.0
percent. Applying the same analysis to the Japanese data yields a
redundancy rate of 1.2 percent. If U.S. plants were to achieve
that level, 4.6 hours or 16 percent of the productivity gap would
be closed. Factoring in other adjustments probably reduces the
effect to between 10 and 12 percent.
While not a dominant factor the analysis thus implies that
absenteeism has a noticeable impact on the productivity
differential. Clearly, when the effects of fringe benefits are
added, its impact on overall costs could be sizeable. Industry
sources suggest that from $100 to $150 in cost per vehicle could
be eliminated with reductions in absenteeism to the Japanese
level. Cumulated over several million vehicles, the absolute
impact is sizeable.
Representative terms from entire chapter:
labor hours
