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In-Depth Productivity Review of Belgium

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Belgium has a high level of productivity. However, growth of productivity has declined quite strongly over the past two decades, and more so than in other advanced economies. This is a worrying development, as fewer productivity gains mean less wage growth and a slowdown in improvements to pensions, health care and well-being. This In-Depth Productivity Review of Belgium assesses in detail the drivers of productivity and recommends a 7-Point Action Plan to reignite productivity growth in Belgium. Reviving productivity growth requires action in many areas cutting across governments and ministerial competences. Measures are needed to instil more dynamism in Belgium’s economy, both among businesses and in the labour market, and to make the public finances more growth-oriented. In addition to recommending detailed policy measures to revive productivity growth, the Review contains three analytical chapters that lay out the evidence base: Chapter 1 on economy-wide and sectoral trends in productivity; Chapter 2 on the role of firms for productivity, with a focus on the dispersion of performance among businesses; and Chapter 3 on the worker dimension of productivity, with a focus on the role of wage bargaining and skills.

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Executive Summary

The Belgian economy is in an enviable position in many ways. Its citizens have strong talent and skills. Firms have a leading edge in digitalisation. Capital intensity is high. Many multinational enterprises aspire to locate in the country. These are all among the factors that make Belgium one of the most productive economies in Europe and in the world. Productivity – how much a worker produces in a given period of time – matters because, if it is high as in Belgium, it ensures high incomes, room for leisure time and good overall well-being. Higher productivity means working smarter, rather than more hours, and being rewarded for it with higher wages.

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