Productivity challenges in the OECD and Ireland Future Jobs National Summit Dublin, Ireland 22 November 2018 Luiz de Mello OECD Director of Economics Department Policy Studies Branch @OECDeconomy @OECD
Productivity is essential for growth Contribution to potential per capita output growth, OECD average Labour productivity Potential employment rate % Working-age population share Potential per capita growth 2.5 2.0 1.5 1.0 0.5 0.0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 -0.5 Source: OECD Economic Outlook, November 2018.
Productivity growth is not recovering in OECD countries… Multifactor productivity growth, OECD average % 4 3 Manufacturing 2 Services 1 0 -1 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source : Sorbe, S., P. Gal and V. Millot (2018) “Can productivity still grow in service - based economies?” OECD Economics Department Working Papers, forthcoming.
… and gaps are widening among firms… Multifactor productivity, average across 24 OECD countries (Index 2003=100) Manufacturing Services 150 150 Global frontier Global frontier 140 140 130 130 120 120 110 110 Firms below the Firms below the frontier frontier 100 100 Source: Andrews, D., Criscuolo, C. and Gal, P. (2016): "The Best versus the Rest: The Global Productivity Slowdown, Divergence across 4 Firms and the Role of Public Policy", OECD Productivity Working Papers No. 5.
… especially in ICT services Multifactor productivity, average across 24 OECD countries (Index 2001=100) ICT services Non-ICT services 200 200 Top 2% 180 180 Global frontier 160 160 Global frontier Top 2% Top 10% 140 140 Top 10% 120 120 Firms below the frontier Firms below the frontier 100 100 80 80 Source: Andrews, D., Criscuolo, C. and Gal, P. (2016): "The Best versus the Rest: The Global Productivity Slowdown, Divergence across Firms and the Role of Public Policy", OECD Productivity Working Papers No. 5.
There are large differences in take-up of new digital technologies Percentage of firms adopting digital technology (2015-16) % Highest 80 Ireland 60 Average Lowest 40 20 0 Social Media High Speed Enterprise Customer Cloud Supply Cloud Internet Resource Relationship Computing Chain Computing Planning Management Management (complex) Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018): “Going Digital: What determines technology diffusion among firms?”, OECD 6 Economics Department Working Papers No. 1476.
In Ireland, productivity has yet to recover in services… Multifactor productivity, median across firms (Index 2006=100) Source : Ireland Department of Finance (2018). 7
… where gaps between foreign and local firms are widest Multifactor productivity difference between foreign and domestic firms (2014) % Services 8 Source : OECD MultiProd.
Policy can foster digital adoption through incentives and capabilities Digital adoption in firms Incentives Capabilities to adopt the latest to benefit from ICT by technologies and making complementary business practices investments By fostering competition & By having better organisational reallocation capital & talent pool Market settings Human capital & skills Entry & exit barriers Managerial quality Structural Labour market policies Education & training policies Access to capital Job matching Digital trade Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018): “Going Digital: What determines technology diffusion among firms?”, OECD Economics Department Working Papers No. 1476.
Business dynamism can improve… Source : Eurostat 10
… by removing barriers to entry and exit OECD indicators of Product Market Regulations and Insolvency Regimes (a higher score denotes stronger barriers) 2.5 Ireland 2 OECD average 1.5 1 0.5 0 State control Barriers to Barriers to trade Penalties for failed entrepreneurship and investment entrepreneurs Product market regulation Insolvency regime Source : OECD PMR Indicators and Insolvency Regimes Databases. 11
Managerial skills can improve through lifelong learning Percentage of the population aged Management skill survey scores, 2014 25 to 64 participating in education and training, 2015 % 3.5 30 3.3 25 20 3.1 15 2.9 10 2.7 5 0 2.5 Spain Ireland Portugal Italy United Sweden Germany Ireland Italy Germany Portugal Spain United Sweden Kingdom Kingdom Source : Eurostat. Source : World Management Survey. 12
Reducing skill mismatches facilitates adoption of digital technologies Percentage increase in the adoption of digital technologies by firms in response to lower skill mismatches (difference between more and less exposed sectors) % 9 8 7 6 5 Highest (GRC) 4 Ireland 3 2 Average 1 Lowest (BEL) 0 Customer Relationship Cloud Computing Cloud Computing Management (high) Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018): “Going Digital: What determines technology diffusion among firms?”, OECD 13 Economics Department Working Papers No. 1476.
THANK YOU For more information, please visit: http://www.oecd.org/global-forum-productivity/ http://www.oecd.org/eco/surveys/economic-survey-ireland.htm OECD Economics OECD Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. 14 This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
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