Tue Sep 5th, 2006 at 11:07:22 PM EST
Hat tip to New Economist
According to the FT:
Are European workers turning into swots? Although the quality of the statistics is notoriously poor, productivity appears to have accelerated significantly. . . . Short periods of data must be interpreted with caution, and it is difficult to disentangle cyclical and structural effects. Nevertheless, it is possible to identify some significant changes in productivity that may be sustainable for a number of years.
- First, through investment in information technology, Europe appears to be narrowing the "innovation gap" with the US.
- Second, corporate restructuring has led to more efficient working practices.
More from the FT:
But the most important explanation may be developments in the labour market. Flexible, particularly part-time, employment has grown. Meanwhile, some full-time workers, such as those at Siemens, have agreed to work longer hours without full compensation. Both trends mean the rate of decline in aggregate hours worked appears to be falling.
Of course the FT would emphasize the labor market reform angle. I think, though, that diffusion of IT and more efficient working practices (some of which may admittedly be facilitated by smart reforms) are much more important. There's more background on the productivity issue here for anybody interested.
If sustained, this is good news for the European economy, and one more nail in the coffin of the "Europe is in economic decline" meme. One key will be to see if this sustained productivity growth can be combined with the more rapid job growth that Europe has enjoyed over the last decade or so.