Without productivity gains, everything goes downhill: The case of Italy

Italy stands out among OECD countries for its complete lack of productivity gains, which can be attributed to low level s of corporate modernisation, investment and labour force skills and an inefficient education system. Without productivity gains, everything goes downhill : Even weak real wage growth leads to a decline in profitability; The tax base stagnates and it is difficult to correct fiscal deficits; public investment must be reduced; Long-term interest rates remain mostly higher than growth, which drives up debt ratios; Cost competitiveness deteriorates constantly. Italy’s core economic policy objective must therefore be to boost productivity.