2024-03-25 14:30:54
While the figures are stagnating or even declining in certain countries, the productivity situation in Europe is increasingly worrying. Since the end of 2019, a drop of 1% in productivity has been observed in the European Union and of 0.2% in the euro zone. The United States is on a completely different trajectory.
Since the end of 2019, while Europe has observed a 1% drop in productivity, American productivity has increased by 6.5%. The gap between the two continents is therefore widening, observed Monday in La Matinale Christophe André, economist at the Organization for Economic Co-operation and Development (OECD) and productivity expert.
According to him, several cyclical factors come into play, including massive budgetary support in the United States and an energy price shock which has hit Europe more. “But there are also structural reasons that can be worrying, such as the capacity for innovation which is less in Europe, as well as a less flexible economy compared to the United States,” he analyzes.
This could potentially affect the growth in Europeans’ living standards, the economist explains: “If productivity growth is lower, this leads to lower wage growth.”
>> Listen to the interview with Christophe André in La Matinale: Productivity drop in Europe, but Switzerland is less affected / La Matinale / 1 min. / today at 06:20
Possible solutions to develop
By investing more in innovation, research and development, Europe could potentially reverse this trend, believes Christophe André.
According to him, a single and strengthened market would also be necessary, “because the United States has a very large market which allows American companies to develop on a large scale. This is particularly important in areas such as digital, in which economies of scale or network are important,” he emphasizes.
The expert also proposes increasing the flexibility of European economies, without compromising the European social model. “Which is not necessarily contradictory,” he believes, “since certain Northern countries are very flexible, while having both very developed models and social safety nets.”
The disproportionate impact of the pharmaceutical sector in Switzerland
Switzerland is doing slightly better than the rest of Europe. Cédric Tille, professor of economics at the Institute of Advanced Studies and Development in Geneva, estimates that after a period of stagnation around 2010, productivity has recovered slightly.
But in our country, competitiveness gains can mainly be attributed to the pharmaceutical sector. “However, this branch does not represent half of the country’s economy. It therefore has a very strong performance which hides a more pronounced weakness in other sectors,” believes Cédric Tille.
Thus, Swiss companies are faced with margins under pressure, which harms innovation and research, often financed by equity. Additionally, a large part of the Swiss economy is oriented towards the domestic sector, in which competition is limited. Therefore, “when you don’t face a lot of competition, the incentive to innovate is weaker,” adds the economist.
Radio subject: Cléa Favre
Adaptation web: Miroslav Mares
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