Policies to improve competitiveness

Choosing the right policy depends on identifying the cause of the lack of competitiveness. The causes of poor competitiveness vary between countries and over time.

Improving labour productivity

Labour productivity can be improved by increasing spending on education and training to help develop skills and close any skills gap. However, this is expensive and takes time. Government may also promote a more flexible labour market, such as reducing trade union power, encouraging part-time work, and encouraging new business start-ups. However, this also takes time and the increase in flexibility can reduce worker security and lead to lower wages.

International productivity comparisons