What possible scenarios if the health measures reduce labour productivity?
The health measures linked to the coronavirus crisis (social distancing in companies) will reduce labour productivity, perhaps for a long time. What could be the consequences of a shock leading to a fall in hourly labour productivity? We can first imagine a scenario of a decline in the supply of goods and services with either a fall in nominal per capita wages, or a fall in earnings, or rather a rise in prices. The private sector’s real income falls in all cases, which leads to a fall in demand for goods and services that balances out the fall in supply caused by the decline in productivity; To prevent a fall in the supply of goods and services, there must be an increase in employment going hand-in-hand with a fall in the per capita wage, or an increase in the working time per employee going hand-in-hand with a fall in the hourly wage. Demand is then also stabilised, thanks either to an increase in employment or to a stable per capita wage; Lastly, we can expect additional productivity investment (automation, etc.) in the medium term to offset the fall in hourly labour productivity.