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Published: 25 November 2011

Development of productivity in the national economy 1976-2010*

Based on preliminary national accounts data, the growth rate of labour productivity in the whole national economy was 3.9 per cent in 2010, having been -4.1 per cent in 2009 and -0.4 per cent in 2007. The respective growth rate of total factor productivity was 3.6 per cent in2010, having been -6.3 per cent in 2009 and -1.3 per cent in 2008.

Development of productivity in the whole national economy 1976-2010*, %

The Hodrick-Prescott filtered long-term growth trend indicates that the pace of growth in labour productivity has slowed down strongly in the whole economy since the mid-1990s, from 3.5 per cent to 0.7 per cent in 2010. Although the annual growth rates for individual years (2004, 2007 and 2010) have been around 3 per cent the trend in labour productivity has been declining since the mid-1990s.

The respective 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 strongly.

Table 1 shows average annual changes of total factor productivity and labor productivity in different time periods. In addition, the table shows capital input, worked hours and labour composition contributions to value added growth and capital intensity change and labour composition change contributions to labor productivity growth.

The contribution of labor composition to value added growth was strongest in the last recession in 1990-1994, an average of 0.7 per cent per annum. In the other period’s contribution of labor composition to value added growth has been 0.2-0.3 percentage points per year. Contribution of capital intensity growth to value added has been fairly stable at an average of 0.7 to 1.0 percentage points per year. Only during the period 1990-1994 growth has been lower, about 0.3 percentage points per year.

Average growths of productivity in the whole national economy, 1976-2010*

	1976-1989	1990-1994	1995-1999	2000-2004%	2005-2010
Value adde volume change, %	3,3	-0,8	4,4	2,9	1,4
Capital input contribution, %	1,0	0,3	0,7	0,8	0,7
Worked hours contribution, %	0,4	-3,2	1,5	0,4	0,0
Labour composition contribution, %	0,3	0,7	0,2	0,2	0,2
Multi-factor productivity, %	1,5	1,3	2,1	1,6	0,4
Capital intensity contribution, %	0,9	1,4	0,1	0,6	0,8
Labour composition contribution, %	0,3	0,7	0,2	0,2	0,2
Labour productivity, %	2,7	3,5	2,3	2,3	1,4

Source: Lönsamhetsundersökningar 2010. Statistics Finland

Inquiries: Antti Pasanen (09) 1734 2629, skt.95@stat.fi

Director in charge: Ari Tyrkkö

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Updated 25.11.2011