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Productivity and resource allocation – Weak level and growth of productivity in Finland's digital services






Asiasanat ja teemat

economic development, Board, boards, national economy, competitive strength, economic policy, productivity, economic growth, economic policy, boards, productivity, economic growth, competitiviness, national economy, economic development




The labour productivity gap between Finland and the world's leading countries narrowed consistently until 2008, when the trend took a downward turn. Since then the productivity gap has been widening. While labour productivity in manufacturing is at a healthy international level, it remains far behind the reference countries in many service sectors. Surprisingly, productivity in Finland has fallen in digital-intensive services.

Finland's corporate sector shows a smaller dispersion of productivity than in the reference countries, which appears to be attributable to the lack of high-productivity companies. At the same time, however, the corporate sector seems to have been able to renew without any problems.

One reason for the lower productivity and weaker productivity growth in Finland compared to the reference countries is the poorer allocation of resources and capital to high-productivity units, and further deterioration in allocation in the early 2000s. However, there has been an improvement in allocation starting from 2012.

Although the aggregate labour income share has decreased, there has been a general increase in the corporate labour income share. Companies with a low labour income share and good profitability have increased their market shares, which translates into a lower aggregate labour income share.

Finland's price competitiveness seems to be historically relatively strong. The COVID-19 pandemic on the one hand and the policy measures taken to deal with its impacts on the other have led to a situation where statistical data do not provide a reliable basis for comparing recent developments.


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