Latest News

Europe’s pandemic productivity growth surge may wane: ECB study

0
Economy26 minutes ago (Nov 10, 2021 09:13)

© Reuters. FILE PHOTO: A steel worker of Germany’s industrial conglomerate ThyssenKrupp AG stands a mid of emitting sparks of raw iron from a blast furnace at Germany’s largest steel factory in Duisburg, Germany. Picture taken January, 28, 2019. REUTERS/Wolfgang Rat

FRANKFURT (Reuters) – Euro zone labour productivity growth surged at the onset of the pandemic as firms rushed to adapt digital technologies but much of the gains are at risk of erosion, a European Central Bank study showed on Wednesday.

Europe’s productivity growth has been anaemic for years, keeping a lid on overall economic expansion and some economists hoped that a rapid adaption of digital solutions could be the COVID-19 pandemic’s silver lining.

Data so far suggest that this is happening as labour productivity is now more than 2% higher than in the final quarter of 2019, even if it has declined somewhat since the onset of the recovery, the ECB said in an Economic Bulletin article.

“The pandemic has accelerated the trend for digitalisation that had already started well before the crisis,” the ECB said.

“Although part of the shift to remote working might reverse over time, some is likely top persist … and could potentially open the door to substantial gains in terms of productivity and employee well-being,” the ECB added.

But the shift is not without risk.

Unlike others crises, the pandemic has not yet led to mass exit of low productivity firms as government guarantees kept companies afloat, halting what is normally a “creative destruction” process, the ECB added.

The redistribution of labour to more productive sectors could also reverse.

As containment measure forced businesses to halt many face-to-face interactions, usually low productivity tasks, activity was redistributed, accounting for 30% to 40% of the labour productivity growth, the ECB said.

“It is not clear to what extent the contribution of sector reallocation will persist over time – the impact already seems to be declining in the second quarter of 2021, and this may accelerate as containment measures are gradually removed,” the ECB added.

Lockdowns may have also interrupted education and training, while the current supply chain bottlenecks could force firms to find new suppliers and supply routes, impacting their productivity.

Europe’s pandemic productivity growth surge may wane: ECB study

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Main owner and AMF launch bid to buy out retailer ICA Gruppen

Previous article

MBA: Mortgage Applications Increase in Latest Weekly Survey

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News