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The challenges for increasing productivity growth in Switzerland Aymo Brunetti

The challenges for increasing productivity growth in Switzerland Aymo Brunetti Head of the Economic Policy Directorate, SECO 16 October 2006. Why is productivity growth an issue in Switzerland ? The productivity problem in the domestic sector Intensity of competition as key factor

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The challenges for increasing productivity growth in Switzerland Aymo Brunetti

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  1. The challenges for increasing productivity growth in Switzerland Aymo Brunetti Head of the Economic Policy Directorate,SECO 16 October 2006 EVD / DFE

  2. Why is productivity growth an issue in Switzerland ? • The productivity problem in the domestic sector • Intensity of competition as key factor • The growth policy of Swiss Government EVD / DFE

  3. 1. Why is productivity growth an issue in Switzerland ? Source: OECD EVD / DFE

  4. 1. Why is productivity growth an issue in Switzerland? GDP per capita in PPP ( OECD = 100) EVD / DFE

  5. 1. Why is productivity growth an issue in Switzerland? Small potential for „hours worked“ 90 80 70 60 50 in % 40 30 20 10 0 I F UK JAP AUT USA EU-15 OECD Germany Switzerland Employment rate 2005 Source: OECD 2006 EVD / DFE

  6. 1. Why is productivity growth an issue in Switzerland? Source: SECO EVD / DFE

  7. 2. Productivity problem in the domestic sector • Three stylized sectors of the Swiss economy • Private sector open to international competition • Private domestic sector • Wider state sector EVD / DFE

  8. 2. Productivity problem in the domestic sector Source : Federal Statistical Office EVD / DFE

  9. 2. Productivity problem in the domestic sector Source: Federal Statistical Office EVD / DFE

  10. 3. Intensity of competition as key factor Source: The Economist EVD / DFE

  11. 3. Intensity of competition as key factor Source: Eurostat EVD / DFE

  12. 3. Intensity of competition as key factor • Possible explanation for high prices • Quality (… but „Big Mac“) • Income level (… but „US“) • Regulations • Competition EVD / DFE

  13. 3. Intensity of competition as key factor • Effects of competition on productivity • Eliminates X - inefficiency • Incentives to use best technology => „imitation“ • Incentives to develop better technology => „innovation“ EVD / DFE

  14. 3. Intensity of competition as key factor • „New economy“ - effect • ICT has big potential for raising productivity • But two preconditions: - competitive pressure in product markets - flexible labour markets EVD / DFE

  15. 4. The growth policy of Swiss Government Main goals of Swiss growth policy 1) Maintaining high employment => Keep labour market flexible 2) Increasing labour productivity => Increase competition in domestic product market EVD / DFE

  16. 4. The growth policy of Swiss Government • „Growth package“ of Government with three main pillars • More competition on the domestic market • Stop growth of the share of Government in GDP • Improving efficiency of Government’s intervention EVD / DFE

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