Labour productivity has barely risen over the past 10 years and the 2020 paycheck seems to look good for everyone. But are we really doing better? On Monday 23 December 2019 Sandra Phlippen, Assistant Professor at Erasmus School of Economics and Chief Economist at ABN Amro, and Casper de Vries, holder of the Witteveen Chair of Monetary Economics at Erasmus School of Economics discussed this topic on the Dutch radio station BNR Nieuwsradio.
According to Phlippen, an ageing society is the main cause of stagnating labour productivity. The working population is getting older and we no longer tend to invest as much in education and technology in the labour process. Also, we switch jobs less often. Despite the fact that no causal link can be established between these trends and the stagnating labour productivity, the growing number of self-employed can be seen as possible evidence. Smaller companies often invest less in human capital and this investment is the lowest for the group of self-employed, says Phlippen.
Another important factor for the low growth is the shift from the production to the service sector, which is experiencing less growth in comparison to the production sector. Even if investments are made, there must also be room to exploit this investment and without sector growth, large investments do not necessarily lead to the desired results. Furthermore, the service sector experiences shortages, which also contributes to the low sector growth. This could either be solved by investing in technology or by longer working days for current employees. For now, neither of these provide a real solution.
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Listen to the entire item on BNR Nieuwsradio, 23 December 2019 (in Dutch).
