Productivity challenges in the OECD and Ireland Future Jobs - - PowerPoint PPT Presentation

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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

Productivity is essential for growth

Contribution to potential per capita output growth, OECD average

Source: OECD Economic Outlook, November 2018.

• 0.5

0.0 0.5 1.0 1.5 2.0 2.5

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

%

Labour productivity Potential employment rate Working-age population share Potential per capita growth

Productivity growth is not recovering in OECD countries…

Source: Sorbe, S., P. Gal and V. Millot (2018) “Can productivity still grow in service-based economies?” OECD Economics Department Working Papers, forthcoming.

• 1

1 2 3 4

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

% Manufacturing Services Multifactor productivity growth, OECD average

4

… and gaps are widening among firms…

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.

Multifactor productivity, average across 24 OECD countries (Index 2003=100)

Manufacturing Services

100 110 120 130 140 150

Global frontier

Firms below the frontier

100 110 120 130 140 150

Global frontier

Firms below the frontier

… especially in ICT services

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.

ICT services Non-ICT services

80 100 120 140 160 180 200

Global frontier Firms below the frontier

Top 2% Top 10%

80 100 120 140 160 180 200

Global frontier Firms below the frontier

Top 2% Top 10%

Multifactor productivity, average across 24 OECD countries (Index 2001=100)

There are large differences in take-up of new digital technologies

20 40 60 80

Social Media High Speed Internet Enterprise Resource Planning Customer Relationship Management Cloud Computing Supply Chain Management Cloud Computing (complex)

%

Highest Ireland Average Lowest

Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018): “Going Digital: What determines technology diffusion among firms?”, OECD Economics Department Working Papers No. 1476.

6

Percentage of firms adopting digital technology (2015-16)

In Ireland, productivity has yet to recover in services…

7

Source: Ireland Department of Finance (2018).

Multifactor productivity, median across firms (Index 2006=100)

… where gaps between foreign and local firms are widest

8

Source: OECD MultiProd. %

Services

Multifactor productivity difference between foreign and domestic firms (2014)

Digital adoption in firms Capabilities

to benefit from ICT by making complementary investments

Incentives

to adopt the latest technologies and business practices Human capital & skills Managerial quality Education & training Job matching Market settings

Entry & exit barriers Labour market policies Access to capital Digital trade

Policy can foster digital adoption through incentives and capabilities

Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018): “Going Digital: What determines technology diffusion among firms?”, OECD Economics Department Working Papers No. 1476.

By having better organisational capital & talent pool By fostering competition & reallocation

Structural policies

Business dynamism can improve…

10

Source: Eurostat

… by removing barriers to entry and exit

11

OECD indicators of Product Market Regulations and Insolvency Regimes (a higher score denotes stronger barriers)

Source: OECD PMR Indicators and Insolvency Regimes Databases.

0.5 1 1.5 2 2.5 State control Barriers to entrepreneurship Barriers to trade and investment Penalties for failed entrepreneurs Product market regulation Insolvency regime Ireland OECD average

Managerial skills can improve through lifelong learning

12

Percentage of the population aged 25 to 64 participating in education and training, 2015

Source: Eurostat. Source: World Management Survey.

5 10 15 20 25 30

Ireland Italy Germany Portugal Spain United Kingdom Sweden %

Management skill survey scores, 2014

2.5 2.7 2.9 3.1 3.3 3.5

Spain Ireland Portugal Italy United Kingdom Sweden Germany

1 2 3 4 5 6 7 8 9 Customer Relationship Management Cloud Computing Cloud Computing (high) % Highest (GRC) Ireland Average Lowest (BEL)

13

Reducing skill mismatches facilitates adoption of digital technologies

Source: Andrews, D., G. Nicoletti and C. Timiliotis (2018): “Going Digital: What determines technology diffusion among firms?”, OECD Economics Department Working Papers No. 1476.

Percentage increase in the adoption of digital technologies by firms in response to lower skill mismatches (difference between more and less exposed sectors)

THANK YOU

14

For more information, please visit:

http://www.oecd.org/global-forum-productivity/ http://www.oecd.org/eco/surveys/economic-survey-ireland.htm

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