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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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The productivity slowdown in Belgium: Main economy-wide and sectoral trends

Belgium has one of the highest productivity levels in the OECD. However, productivity growth has declined over the past decades, more so than in most other OECD and main neighbouring economies. The decline in labour productivity growth has been mainly due to lower multifactor productivity growth, while capital deepening has held up better. The manufacturing sector, even though its productivity has slowed, has outperformed the rest of the OECD. By contrast labour productivity growth in services has been lower and declined more sharply than in the rest of the OECD.

English

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