Showing posts with label EU productivity. Show all posts
Showing posts with label EU productivity. Show all posts

Friday, December 1, 2017

1/12/17: Euro - Unfit for Diverging Economies


An interesting chart from Bloomberg on intra-EU productivity divisions: https://www.bloomberg.com/news/articles/2017-11-29/eu-s-productivity-split



The key here is not the current spot observation or the trend forecast forward, but the dynamics from 2008 on. Since the GFC, productivity divergence within the EU has been literally dramatic. And the two interesting markers here are:

  1. Divergence in productivity between the ‘North’ and the ‘South’ - highlighted in the Bloomberg note, but also
  2. Divergence in productivity between Germany and France


In simple terms, until about 2010, the Euro monetary union was not quite working for the ‘South’ while it did work for the ‘North’. However, since 2010-2012, the divergence between the ‘North’ and the ‘South’ has spread to France vs Germany divide as well. The Euro, it appears, is not quite working for France either.

A more involved view of the continued divergence in the Euro area is here: https://media.arbeiterkammer.at/wien/PDF/varueckblicke/R.Fulterer_I.Lungu_Yec_2017.pdf.



Saturday, February 11, 2012

11/02/2012: Labor Productivity - some cross-EU comparatives

There has been much of talk about Euro area (and EU27) competitiveness trends recently in the media. Some of the commentary I've seen references the issue of decoupling in competitiveness across EU states. In light of this, I decided to take a look at productivity trends. Using eurostat data, I was able to:

  1. Take eurostat main series for per person aggregate (total) productivity index that sets 2005=100
  2. Rebase the index to Q1 2000=100 and recompute entire set of EU27 countries, plus EA17 and EU27 aggregates
  3. Obtain via (1) and (2) above new set of productivity indices that reflect dynamics in per person productivity since Q1 2000 through Q3 2011
  4. Note: data is seasonally adjusted and I am only reporting countries where data is hours adjusted as well.
Here are the core charts (I added Ireland and EU 27 average in every chart):




So few trends are apparent:

  • Ireland performs - since the beginning of the crisis extremely well in terms of productivity improvements and levels - much due to the massive destruction of its employment base (I commented on this effect a number of times before). Overall - this is remarkable performance albeit at huge cost.
  • Spain has posted some significant increases as well, mostly due to destruction of employment - much more so than Ireland.
  • Italy is performing poorly as does Greece. In fact, Greece is the third worst performer in the entire EU27 in terms of productivity growth since the beginning of the crisis (Q1 2008).
  • Portugal improvements appear to be largely consistent with the pattern for Spain.
  • Finland clearly leads the pack (after Ireland) in the group of Small Open Economies (SOEs)
  • Strong trends in growth in East-Central Europe (ex Hungary and Slovenia) 
Now, let's take a look at cumulative growth in productivity since the beginning of the crisis - note: green boxes mark countries that outperform EU27 average by more than 1/2 STDEV, while red boxes mark those countries that underperform the EU27 average by more than 1/2 STDEV:
And similar analysis for cumulative growth in productivity since Q1 2000:
 So is there 'decoupling' going on in terms of labor productivity? Not really. Here's what's happening:

  • Spain shows highest gains in total productivity since Q1 2008 but weak (roughly average) gains since Q1 2000
  • Ireland shows second highest gains since Q1 2008 and above average (6th highest in EU27) gain since Q1 2000
  • Slovakia doing spectacularly well, albeit, of course, from low levels, as is Estonia (though not too great during the crisis period)
  • During the crisis, Belgium, UK, Greece, Hungary, Italy, lux & Sweden all posted below average (more than 1/2 STDEVs) performance
  • Since Q1 2000, Italy and Lux were the only two statistical underperformers.
So unless we go beyond Q1 2000 (the period for which we don't really have coherent comparable data) there is no 'decoupling' going on in labor productivity. There is shallow growth in it on average, but no dramatic 'decoupling'. In other words, much of core Europe is pretty poor in terms of labor productivity growth, while East-Central Europe and Ireland are performing pretty well.