Decreasing labour productivity growth – key problem in Finnish economy

Tappiollinen tulosAccording to Statistics Finland the long-term growth trend indicates that the pace of growth in labour productivity has slowed down strongly in the whole Finnish economy since the mid-1990s, from 3.5 to -1.0 per cent in 2012. 

The long-term growth trend for total factor productivity shows that total factor productivity fluctuated between 1.5 and 2 per cent before the year 1993. Between 1993 and 2000, total factor productivity grew at the average rate of 2 to 2.5 per cent per annum. Since 2000, the growth trend of total factor productivity has slowed down.

Source: Statistics Finland.

Source: Statistics Finland.

A distinctive feature of Finnish economic growth, especially since the Second World War, has been the major significance of growth in productivity.

Change in productivity is the part of growth in output that is not explained by change in the use of input(s) or compensation of inputs. Growth in total productivity depicts not only technological development and increased efficiency but also the effects from improved quality of inputs, management, logistics and organisation.

Consequently, Finland is losing one of its key drivers of economic growth.



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