Economic crisis slows down productivity growth

17/11/2009 15:00

Dutch industry produced only 0.3 percent more per unit of labour, capital goods, energy, materials and services in 2008 than in 2007. This is the lowest productivity growth since 2002. The low growth rate in 2008 was caused by the economic recession, which began in that year.

Diminishing production results in overcapacity

Companies sold fewer and fewer goods and services in the course of 2008. However, they could not cut back their workforce and input of capital goods such as machines accordingly. As a result, at the end of 2008 they had far too much capacity. Labour and capital goods were not used to their full capacity, and this slowed down productivity growth.

Production by industry in the Netherlands grew by 2.2 percent in 2008. As the total volume increase of all means of production was 1.9 percent, productivity grew by 0.3 percent.

Productivity growth in Dutch industry

Productivity growth in Dutch industry

Crisis affects manufacturing most

The manufacturing industry has been hit hardest by the crisis. In 2008 productivity was even 0.4 percent lower than in 2007. Productivity did grow in other sectors of industry, but in transport and trade and in the hotel and restaurant sector the increase did slow down. Productivity growth remained steady in financial and business services.

The construction sector realised above average productivity growth in 2008. Growth had already been strong in this sector in 2007, partly because of the shortage of workers in 2007 and the beginning of 2008. This probably forced construction companies to work more efficiently.

Productivity growth in some sectors of industry

Productivity growth in some sectors of industry

Dirk van den Bergen