American workers' productivity in 1990 fell 0.8 percent, its steepest drop since the last recession and the first time in 10 years it has declined for two consecutive years, the government reported.

The Labor Department said the decrease in non-farm productivity last year was the sharpest since a 0.9 percent decline in 1982 and followed a 0.7 percent drop in 1989 - the first time since 1979-80 that productivity fell for two straight years.Non-farm productivity is defined as output per hour of work.

Increased productivity, or getting each worker to produce more during each hour of work, is considered vital to increasing the nation's standard of living without boosting inflation. It also can increase the competitiveness of U.S. goods overseas.

The report also showed that during the fourth quarter, the nation's businesses trimmed the working hours of their employees at a revised annual rate of 2.8 percent - the largest falloff since the depths of the 1981-82 recession. The October-December rate first was reported to have fallen 2.7 percent.

It was the second quarterly decline in the number of hours worked, which economists said can be expected during a recession when businesses are implementing large-scale layoffs and making do with fewer employees.

Although productivity fell during all of 1990, including a 1.8 percent drop in the first quarter, it advanced a revised 0.3 percent during the final three months of the year - faster than the 0.1 percent rate first reported.

In the manufacturing sector, which has been among the hardest hit by the recession, productivity declined at an annual rate of 1.6 percent in the October-December period, slower than the 2.4 percent decline in the original report last month. Factories trimmed their working hours by 6.8 percent 1981, which economists said could be expected during an economic downturn when firms are implementing large-scale layoffs and making do with fewer employees.

The decline in manufacturing hours was the steepest since the final quarter of 1982, when hours fell 8.6 percent.

For all of 1990, manufacturing productivity increased 3.0 percent and hours worked fell 2.1 percent.

Meanwhile, hourly labor costs, a major measure of inflation for non-farm businesses, rose at a revised 4.0 percent rate in the fourth quarter, rather than the 3.8 percent first reported. For workers, that translated into a 2.8 percent decline in compensation once consumer inflation was factored in, a bit more than the 2.7 percent drop in the original report.

Unit labor costs, a key gauge of future price inflation, rose 3.7 percent, compared with a 4.1 percent jump during the third quarter.

For all of 1990, hourly labor costs increased 3.5 percent while unit labor costs increased 4.3 percent.

Total business productivity, including farming, declined 0.6 percent for the year, compared with a 0.5 percent decline in 1989. Last year's drop, as in the non-farm sector, was the largest since 1982.

For the fourth quarter, total business productivity fell at a revised 0.3 percent rate, up from a 0.3 percent decline first reported, as hours worked fell 2.2 percent. Hours worked originally were thought to have fallen 2.1 percent.

Before the two-year slide in productivity that began in 1989, the nation had averaged productivity growth of 1.6 percent a year since 1982, following the end of the last recession.

That was a better performance than the 1.2 percent average in the 1970s but far worse than the 2.5 percent annual gain posted in the two decades following World War II.