Productivity growth is crucial. Indeed, not only is it an important factor for the growth of real incomes, but, as the main determinant of economic growth, productivity growth also means that many of the challenges we face today are easier to bear financially. One obvious example is the budgetary cost of ageing population. With an increase in average annual labour productivity growth from 1.2 % to 1.3 %, the budgetary cost of ageing would fall by 0.6 pp of GDP over the period 2023-20701. Furthermore, large-scale investments are also needed to adapt to climate change and the climate transition, and other societal challenges that are emerging in, e.g., the areas of mobility, social cohesion, new developments in health care, geopolitical developments, defence, etc. These challenges require additional resources/investments, both private and public, which without economic growth could only be financed by a decline in consumption and/or would put further pressure on the sustainability of public finances.
The present report looks at the state of play of productivity growth in Belgium and focuses on two levers that are important to boost productivity growth.
