Productivity Brief

2nd half of 2022 – Issue 03

News from the network of National Productivity Boards


1. Publications

1.1. National Productivity Boards’ annual reports

*       France. 16 May 2022. Productivity and competitiveness: post-covid cyclical and structural analyses.

This report notes that France managed the COVID-19 crisis well in terms of employment, GDP, mortality and the financial health of businesses, but the public deficit increased. The crisis has resulted in a loss of productivity in the short term. In the medium term, positive effects on productivity are expected from teleworking, better dissemination of new technologies and reallocation.

This report also shows the critical role of human capital (i.e. quality and quantity of education and soft skills) in the slowdown of productivity growth, while also discussing the contribution made by within and between sector productivity dynamics.

Additional challenges are improving the economic attractiveness of France for high value-added activities, improving employment and living standards, enabling the green transition and evolving towards a tax system that weighs less on production factors (capital and labour).

*       Denmark. 31May 2022. Productivity 2022.

This report evaluates several policy initiatives in Denmark relevant for productivity, such as regulatory measures to ease the recruitment of foreign labour and increase corporate income tax for financial sector companies.

The report also discusses guiding principles for support packages for future epidemics and assesses the options presented in February 2022 by the expert group for green tax reforms.

Moreover, it discusses trends in productivity, including the potential long-term effects of the COVID -19 crisis. Finally, it examines trends in the market power of Danish companies and the drivers behind them.      

*       Ireland. 16 September 2022. Ireland's Competitiveness Challenge 2022.

This report consists of 5 main sections with specific policy recommendations.

First, it discusses the current challenges to the recovery from the pandemic, such as inflation and the Russian invasion of Ukraine. Subsequently, it explores productivity developments and the importance of productivity growth during the green and digital transitions.

In other two chapters, it discusses the Irish labour market and the relevance of lifelong learning and upskilling, and it examines how to invest efficiently in economic and social infrastructure. Finally, the report targets some areas where domestic policy can play a role in controlling costs affecting firms.

*       Finland. 30 September 2022. Wages and competitiveness depend on productivity: How can we foster productivity growth?

This report describes the characteristics of Finland’s innovation policy. It evaluates Finland's cost-competitiveness, which has remained close to the 2000s’ average since 2017.

It also discusses the reasons for Finland’s slow productivity growth. These reasons include: the permanent negative technology shock experienced by Finland's electronics industry; the weakened cost-competitiveness of the export industry following the financial crisis, which reduced incentives to invest; the poor allocation of resources, with companies employing fewer people than could be expected from the perspective of profit maximisation.

These factors could reflect issues related to the availability of skilled labour, labour market regulation and distortions in capital taxation.

*       Germany. 9 November 2022. Competitiveness in times of geopolitical change.

The competitiveness of the German economy relies on trade liberalisation and the growing international division of labour to a greater extent than in most other large economies. Recent crises, however, have shown the vulnerability of international supply chains and in some cases, a high dependence on foreign suppliers. In Germany and the EU, dependencies are particularly visible for energy supply and the supply of critical raw materials.

Against this backdrop, this report analyses the competitiveness of the German economy with a particular focus on import dependencies and distortive policy instruments by countries outside the EU. It discusses policy options for increasing the resilience of value chains, through diversification, strategic alliances and the expansion of production capacities in strategically important areas in Europe.

*       Slovenia. 7 December 2022. Productivity Report 2022.

This report notes that in the short term Slovenia made gradual progress (GDP per person employed in 2021 was 1.7 p.p. higher than in the previous year), but in a longer-term perspective Slovenia has not been transforming structurally fast enough.

Second, while the corporate sector appears to have weathered the COVID crisis successfully, it is currently facing challenges linked to high energy prices, monetary policy tightening and the need to transition to an integrated, smart, circular economy.

Third, the globalisation of supply chains is opening new opportunities that could be better exploited in the future, if Slovenian companies could upgrade their participation within global value chains.

Fourth, looking ahead, the challenge is to decouple growth from greenhouse gas emissions, where progress is being made, but additional action is needed to transition to industry 4.0.

All of this calls for significantly accelerated investment and structural change in Slovenia’s government and corporate sectors aimed at (i) transitioning to innovation-driven growth and a low-carbon circular economy, (ii) strengthening human resource development and social capital and (iii) promoting a more agile business environment with a strengthened ecosystem approach.

*       Greece. 12 December 2022. Struggling for a New Regime.

This report discusses the fast recovery of the Greek economy after the pandemic and the improvements in growth, productivity and competitiveness. Tourism and transport are among the industries with the highest output and multifactor productivity growth.

However, the current global uncertainties threaten growth. According to the results of a survey, the major problems inhibiting productivity in Greece are its weak production base, the small average size of firms, the inefficient labour market and institutional dysfunctionalities.

The most promising policies for raising productivity in Greece are labour market and educational reforms, productive investment, the promotion of research and innovation and institutional reforms in the public sector and markets.

*       Luxembourg. 15 December 2022. 2021-2022 Annual productivity Report.

This report consists of two parts. The first part discusses the views of Luxembourg’s Conseil National de Productivité on (i) long-term productivity developments; (ii) the link between productivity and purchasing power and (iii) the need to decouple economic output from resource consumption.

The second part consists of three studies by STATEC, Luxembourg’s statistical office. The first is about the reasons for Luxembourg’s productivity slowdown in a comparative perspective. The second finds evidence that more productive firms in Luxembourg tend to pay higher wages. And the third, which is about environmental efficiency per sector, shows that in Luxembourg industries with low risks to the environment (as per the European Bank of Reconstruction and Development’s taxonomy) account for the highest share of output and pollution, although medium and high-risk industries account for a greater proportion of emissions per unit of output.

 *       Belgium. 23 December 2022. 2022 annual productivity report.

This report discusses the productivity slowdown in Belgium over the 2000-19 period, which is associated with the tertiarisation of the economy. It shows that intra-sector productivity developments are the largest contributor to aggregate (and declining) productivity growth in Belgium, against a backdrop of weak resource reallocation between sectors.

It goes on to evaluate the efficiency and effectiveness of Belgium’s R&D spending and discusses topics related to the green transition, innovation and human capital. R&D support to firms has increased both with regional subsidies and federal tax incentives.

An evaluation of these measures finds a positive effect of subsidies and the partial exemptions of withholding taxes for research personnel, but the effect of corporate income tax benefits is unclear. A better combination of both measures could boost R&D.

On innovation, the report underscores its contribution to the success of the green transition and calls for better diffusion of innovation across firms, including SMEs.

On human capital, the report shows evidence of the higher productivity returns of STEM employees compared with other profiles. Belgium performs weakly on STEM profiles and Belgian firms have difficulties in finding IT personnel. Policies increasing the supply and mobility of STEM profiles and addressing the loss of STEM skills during the COVID pandemic could therefore help improve Belgian productivity.

 1.2. Other NPB publications

*       German Council of Economic Experts, 2022: Energy crisis and structural change: prospects for German industry. German Council of Economic Experts, November 2022

*       Lallement, R., du Roscoät, B., Servajean-Hilst, R., Bauvet, S., 2022, Soft skills to innovate and transform organizations. France Stratégie, Document de travail n° 2022-02

*       Bezy, T., Bruneau, C., Crofils, C., Lavenant E. and Mavridis, D., 2022. How can we explain the recruitment difficulties anticipated by companies? France Stratégie, Document de travail n° 2022-04

*       Baïz, A., Guyot, M., Lewandowski, M., Suty, A., 2022. What public policies assessments are conducted and for what purposes? France Stratégie, Rapport, June 2022

*       Pisani-Ferry, J., Mahfouz, S., 2022. Climate action: a macroeconomic challenge. France Stratégie, Note d’analyse, November 2022 n° 114

*       University of Latvia, 2022. Economic Barometer. LV PEAK Economic Barometer No.1 (1) June 2022

*       Fernandes, D., Simões, M. Fonte-Santa, S., 2022. The determinants of COVID Policy Support in Portugal, Gabinete de Planeamento, Estratégia, Avaliação e Relações Internacionais, Ministério das Finanças, September 2022

*       IMAD, 2022. 2022 Development Report, Institute of Macroeconomic Analysis and Development, Ljubljana, September 2022

2. NPB events

2.1. Past Events

 2.2. Upcoming events

  • Berlin, 26 January 2023 – scientific workshop by the 2023 National Productivity Dialogue (hybrid format), featuring 4 research papers. For more info: agenda. Want to register?
  • Berlin, 26 January 2023 – 2023 National Productivity Dialogue (hybrid format), with a focus on energy, international trade and international dependencies. For more info: agenda. Want to register? 
  • Riga, 22 February 2023 – 2022 National Productivity Dialogue (hybrid format) to present Latvia’s NPB 2022 annual report and recent productivity–related research. Contact for registration and agenda.
  • May 2023 National Productivity Board workshop on EU productivity and competiveness challenges in the face of the current global tensions (virtual event; further details to be announced).

3. People

  •  Welcome to:

o    Professor Dr. Dr. H.C. Monika Schnitzer, chair of the German Council of Economic Experts

o   Minister Karel Hirman, chair of Slovakia’s National Productivity Board

NPB Newsletter · DG ECFIN · Brussels · Belgium