In-Depth Productivity Review of Belgium

Acknowledgements
Executive summary
	Why Belgium needs urgent reform to reignite productivity growth
	The 7-Point Action Plan
		Action 1: Promoting competition and easing regulatory restrictions in services
		Action 2: Improving the effectiveness of government support for R&D
		Action 3: Strengthening risk capital and reducing costs on risk-taking
		Action 4: Facilitating the job mobility of workers away from ailing firms
		Action 5: Supporting the creation of a new culture of lifelong learning
		Action 6: Giving firms and workers more freedom to set wages
		Action 7: Making the public finances more friendly to productivity growth
	Content of this report
Overview of main findings and policy recommendations
	Belgium’s productivity slowdown: Long-lasting and increasingly more severe
		Fact 1: Productivity in Belgium: High, but growing more slowly than abroad
		Fact 2: Developments in productivity have been heterogeneous across sectors, firms and regions
		Fact 3: Low dynamism in the business landscape and people’s work careers
		A few cautionary words on this study
	The 7-Point Action Plan to reignite productivity growth
		Action 1: Promoting competition between businesses, especially in services
		Action 2: Improving the effectiveness of government support for R&D
		Action 3: Risk capital, risk attitudes and bankruptcy risk
		Action 4: Making it easier for workers to move from ailing to fast-growing firms
			Job protection for regular-contract workers against individual dismissals is light along several important dimensions
			By contrast, job protection for regular-contract workers against collective dismissals is stringent
		Action 5: Improving education and creating a new culture of lifelong learning
			Better education
			Better skill matching
			Better lifelong learning practices
		Action 6: Giving firms and workers more freedom to set wages
			The collective bargaining system
			Seniority-based pay
			Early retirement schemes
		Action 7: Making the public finances more friendly to productivity growth
			More and better public investment
			A tax system no longer hindering the resource reallocation process
	References
Chapter 1: The productivity slowdown in Belgium: Main economy-wide and sectoral trends
	1.1. Productivity in Belgium: High, but growing slowly
		Labour productivity in Belgium is high
		Labour productivity growth has been weak since the mid-1990s
		Estimating the total shortfall in labour productivity over the past two decades
		Labour productivity is highest in the Brussels-Capital Region and grows at the fastest pace in Flanders, leaving Wallonia behind
		Stagnant MFP has been the main cause of Belgium’s productivity slowdown
	1.2. Main reasons for the productivity slowdown in Belgium
		Common reasons across OECD countries
		Some Belgian specificities
	1.3. Sectoral analysis
	References
Chapter 2: The firm dimension of productivity: The role of productivity dispersion and business dynamics
	2.1. Introduction
	2.2. Productivity dispersion and technology diffusion
		Evidence of productivity heterogeneity
		Diffusion of productivity gains: Catch-up of laggard firms and the role of policy
	2.3. Business dynamics and labour market outcomes
		Trends in business dynamism
		Young firm activity
		Policy and start-up dynamics
	2.4. Firm exit and zombie firms
	2.5. An industry snapshot of performance indicators
		Indicator 1: Mark-ups
		Indicator 2: Entry rates
		Indicator 3: Exit rates
		Indicator 4: Zombie firms
		Indicator 5: Productivity dispersion
	References
		Annex 2.A. Data
		Annex 2.B. Methodology
Chapter 3: The worker dimension of productivity: The role of wages and skills
	3.1. Wages and productivity
		Why productivity matters for wages and wages matter for productivity
		Wage-productivity alignment: A look at sectors
		Wage-productivity alignment: A look at firms
	3.2. Skills and productivity
		Imbalances between the labour supply and demand for occupations
			Occupational imbalances in Belgium are similar to the OECD average
			Shortages are concentrated in high-skilled occupations
			Automation is likely to exacerbate occupational imbalances
			The matching of skill demand and supply is related with productivity
			Differences in labour market matching emerge at the regional level
		Skill use in the workplace
	References