With labour costs now beginning to rise in many countries, firms may start to reconsider investment decisions, the report adds, writes the OECD.
But political uncertainties, trade tensions and the erosion of business and consumer confidence may continue to weigh on investment. The report calls for policies to stimulate investment, capitalise on the efficiencies and economies of scale provided by the digital transformation and encourage growth in high productivity activities.Slowing productivity growth limits the scope for improvements in material well-being.
The OECD says productivity is ultimately a question of “working smarter” – measured by ‘multifactor productivity’ – rather than “working harder”. It reflects firms’ ability to produce more output by better combining inputs through new ideas, technological innovations, as well as by way of process and organisational innovations..
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