Since the 1990s, advanced economies have been beset by low productivity growth, something that also afflicted developing countries following the global financial crisis of 2008. With the arrival of the coronavirus pandemic last year, things have only become worse. Covid-19 lockdowns have weakened demand, investment, trade and contributed to loss of income. Companies are facing mounting debt and many are being closed. In addition, disruptions to education have had an adverse impact on human capital. Low productivity is everyone’s concern. It determines income and output growth, and ultimately living standards. As Paul Krugman famously puts it, “A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker”. Policymakers and economists also worry about low productivity because of its effect on financial stability, namely a higher debt-to-gross domestic product ratio, and social stability, as a result of less money to spend on social protection and addressing inequality. China’s ‘two sessions’: wealth inequality poses threat to Beijing’s post-pandemic economic plan In the face of this, much effort is expended on studying the causes of and solutions to low productivity. While everything from a slowdown in global trade to weak capital investment to ageing and social unrest are blamed for subpar productivity, part of the answer lies beyond the macro level. A 2017 poll by American analytics and advisory firm Gallup found only 15 per cent of global employees are engaged at work, meaning they are highly enthusiastic and involved in their jobs. The poll was taken before the pandemic, but the added stress and pressure associated with the unprecedented event could well have worsened worker disengagement around the globe. US employee engagement fluctuated significantly throughout 2020 as workers were taken on a roller coaster ride, a recent Gallup poll showed. Low work engagement is bad news for organizations. Research by Gallup and others has found disengaged or unhappy employees tend to have a higher rate of absenteeism; lower productivity; and low level of well-being, customer service and work quality, which inevitably lead to lower profitability. What is striking is that managers play a key role in workers’ disengagement. Gallup has found if workers are disengaged at a workplace, there is a more than two-thirds chance it is due to bad managers. Anyone with knowledge of ancient Chinese history might think this sounds familiar. Evidence of how bad ministers, broadly analogous to present-day managers, can ruin the country as well as advice on how to choose good leaders can be found in The Compilation of Books and Writings on the Important Governing Principles by Qunshu Zhiyao, which was compiled under the instruction of Emperor Taizong (626-649 AD) of the Tang dynasty. To the ancient Chinese scholars, personal characteristics and values are the very foundation of a good person. Therefore, by promoting virtuousness, an organisation establishes the base for good governance. The first order of business for a leader then is to promote virtuous people, without which he or she will never be able to rest easy. The scholars’ work is so detailed they even identify the characteristics of six virtuous and unvirtuous managers. Virtuous managers are sagely, good, loyal, wise, honourable and unafraid to point out the faults of an organisation. Unvirtuous managers are incompetent – typically work for money and have no interest in the job – flattering, treacherous, slandering, crooked and vicious. Furthermore, the scholars provide farsighted advice on hiring virtuous managers. Although accepted today, these intellectuals recommended the hiring of able and righteous people regardless of their social status and relationship with a leader – and even if they are foes. What is more profound and still largely unheard of today is the idea that a person who nominates a candidate is accountable for their selection. The scholars’ advice also depends on a candidate’s background. For example, if the person is prominent and prosperous, assess the people they employ or recommend on whether they are good, able and willing to work harmoniously. If the candidate is a non-achiever and in despair, observe the tasks they are willing or unwilling to do. A non-achiever may be so because they refuse to take on tasks. If the candidate is rich, check whether they are generous. If they are poor, check whether they refuse ill-gotten gains. To test whether a candidate is greedy or self-serving, examine the circumstances of their previous positions. Those that are virtuous and competent might have been reluctant to take up a post, but once they do, they are willing to step down if necessary. The greedy would be very willing to take up a position, but refuse to step down regardless of circumstances. Economists and policymakers have long dominated the productivity debate, but if employees are not happy and disengaged at work, do those macro ideas matter? If organizations do not care or know how to hire the right managers, there will be no escape from what ancient Chinese scholars and Edward Burke have long warned, “those who do not know history are destined to repeat it”. Hsiao Chink Tang is a senior economist at the Asian Development Bank