The Labor Force Evaluation System consists of:

		Weighting
	1. Legal Framework	30%
	2. Relative Productivity	30%
	3. Worker Attitude	25%
	4. Technical Skills	15%
	LFEM	100%

The categories for assessing results are:

	Ratings Scale
	66 – 100	Consistently productive labor force. Superior performance with advanced technology. Labor unit costs are low relative to the value of goods and services produced.
	51 – 65	Evolving labor force. Some capacity for producing high-value added goods and services requiring advanced technology; acceptable unit costs, but wages and compulsory benefits and taxes are eroding profitability on labor-intensive work; disputes with employee are infrequent.
	36 – 50	A labor force with substandard skills. Wages and compulsory benefits and taxes are low, permitting labor intensive operations; limited motivation to upgrade kills through vocational training; achieving acceptable unit costs depends on choices of equipment and supervision.
	0 –35	A labor force with substandard work ethic and skills. Wages and compulsory benefits and taxes are low, but productivity is extremely low, thereby excluding most labor intensive operations; low probability of achieving acceptable unit costs.

Legal Framework (30% of LFEM)
Nine criteria are rated from zero to ten (best case). Ten additional points are allocated at the discretion of the person rating the nine criteria to allow for superior situations.

	General Labor Law   Assessment	1. Written Law. 2. Actual Practices
	Specific Aspects	3. Hire/Fire/Layoff Flexibility 4. Compulsory Benefits and Taxes 5. Rights of Employees to Affect Decision Making 6. Restrictions on Expatriate Personnel
	Organization of Labor	7. Leftist or Rightist Influence on/within the Unions 8. General Union Corruption, including Organized Crime 9.Collective Bargaining Process and Term Adherence

Relative Productivity Measure (30% of LFEM).

Manufacturing wages obtained from statistics compiled by the International Labor Organization (ILO) and those published by the country are converted to Special Drawing Rights (SDRs) Output per employed worker is also converted to SDRs from ILO, IMF, and country statistics. A rolling three-year average is used to dampen exchange rate effects.

	Output Per Day in SDRs
	Wages Per Day in SDRs

Worker Attitude (25% of LFEM).

Two equally weighted measures are used to assess attitude:

First, dispute days lost per 1000 potential working days (called DDLs) are obtained from ILO data and statistics released by the country. The average of the 49 countries is awarded 25% of the 100% in this subindex; two standard deviations from the mean or more receive zero (high DDLs) or 50% (low DDLs).

Second, absenteeism is an important measure of attitude, but statistics are difficult to obtain and are frequently not comparable. Interviews, secondary sources, and information volunteered by clients, government agencies, and others assist senior staff judgments. The average of the 49 countries is 12%, and this level of absenteeism is awarded 25% of the 100% in this subindex; 4% or less receives a perfect 50%, and 18% or more is assigned zero.

Technical Skills Assessment (15% of LFEM).

BERI’s senior staff estimates the level of skilled and professionally trained as a percentage of the total employed labor force and arbitrarily gives the country a rating between zero and fifteen (best case).

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