April 24, 2024
Today at
01:10
Boosting productivity growth in the economy is the solution to many problems. But it’s easier said than done.
A big hole in the budget, high government debt, potholes in the roads, outdated rail infrastructure, striking prison guards, demonstrating educational staff, cries for help from childcare centers. There are calls from all sides for more government money that is not available.
At the same time, major challenges must be tackled: aging, immigration, the threat of war, climate change. Strong and sustainable growth of the economy would make that job a lot easier.
But the country is tired. The corona and energy crisis have had a serious impact. Dissatisfaction is widespread. Families complain about the overpriced shopping cart, employees about their wages not increasing, companies about their lost competitiveness.
Policymakers are trying to keep the economy wobbling. But it is difficult to compromise. Because almost every measure has a right and a counterproductive effect at the same time. Higher wages weaken competitiveness. Government subsidies go hand in hand with more taxes.
There is a way to structurally boost economic growth: boosting productivity. On paper it is simple: by making people and machines work more efficiently and collaborate better. In practice this is a lot more difficult. In recent years, productivity growth in our economy has slowed significantly. And there are many reasons for that. 64 economists are sounding the alarm in De Tijd.
If this trend can be reversed, important gains can be made for the economy and prosperity. That doesn’t have to cost much. This can be done by setting different priorities in policy.
Boosting productivity cannot be achieved by waving a magic wand. A wide range of measures need to be taken.
You can’t do it by waving a magic wand. A wide range of measures need to be taken. Each in itself is not that difficult: raising the bar in education, making more efforts for innovation, embracing technological innovations such as artificial intelligence more quickly, removing the barriers that stand in the way of an efficient labor market, entrepreneurship and competitive companies, government investments focusing on traffic, telecom and energy infrastructure that make the economy run more smoothly.
Everyone benefits from that. But it also requires a joint effort from families, employees, government and companies. They must be prepared to jump over their own shadow.
Young people and their parents must accept that the bar in education is being raised, workers and trade unions must no longer resist new technologies in the workplace that require retraining and can cost jobs, companies and professionals must accept that the walls that keep them protections are being removed, policymakers must resist the pressure from lobby groups and the tendency to want to regulate everything.
The pill that contains vitamins for a productivity boost in the economy works. But it can taste bitter. This means that not everyone’s enthusiasm for it will be the same. Therein lies the great challenge for policymakers: to realize that this is the obvious path, and then to convince others.
