Towards a productivity agenda for a European region

Towards a productivity agenda for a European region

April 25, 2024

A boost for Flemish labor productivity through 19 concrete levers

The Flemish labor market is confronted with three gigantic challenges. First, the demand for labor is rising sharply, causing c. 440,000 additional jobs needed by 2030. At the same time, it is expected that the number of people of working age will stagnate around 5.2 - 5.3 m by then. In addition, Flanders is facing an intensifying qualitative mismatch on the labor market, causing the number of open vacancies for technical profiles, healthcare workers and teachers, among others, to rise sharply. For example, in a period of 6 years the number of vacancies has doubled, from c. 35k in 2017 to c. 70 k. in 2023.

Policymakers can follow two strategies in this context, namely further increasing the number of workers and/or focusing on productivity growth. In this study we analyze the productivity challenges for Flanders in detail, with a view to developing a productivity agenda / productive human capital agenda that contains concrete levers to tackle these socio-economic challenges.

Increasing productivity in Flanders

In this research we study the evolution of labor productivity, specifically for the Flemish private sector. Productivity can be measured as added value per hour worked or per employee.

Based on extensive data analysis, in-depth interviews with experts and detailed desk research, we identified five critical pain points that have had a negative impact on both gross added value per hour worked and the total number of hours worked on an annual basis.

Five critical pain points for productivity growth in Flanders

  1. Productivity slowdown - Productivity growth in the Flemish private sector has been on a steady decline
  2. Productivity gap - There are strong sectoral differences, both in productivity growth and in total productivity
  3. Skills mismatch - Labor demand for new skills (e.g. STEM) is increasing rapidly and labor supply is not keeping up
  4. Lack of learning culture - Flemish people generally do not want to engage in lifelong learning
  5. Reduction in working hours - Flemish employees have on average reduced their working hours over the past decades

Five critical pain points for productivity growth in Flanders
Five critical pain points for productivity growth in Flanders
"Especially in the current context of increasing labor demand and unfavorable demographic developments, productivity growth is crucial. An in-depth analysis of our recent productivity growth performance shows that new strategies, specifically focused on sectors and profiles where the need for targeted action is greatest, are required"

19 levers to achieve a boost

We identified 19 levers to bring Flemish labor productivity to a structurally higher growth rate, divided into 4 large clusters:

Boosting sector-specific skills

Levers to address large productivity differences between and especially within sectors

#01 - Scale up sectoral competence centers - Evolution towards full-fledge productivity hubs

#02 - Strengthen 'workable work' - Focus on business and work organization in SMEs

#03 - Strengthen targeted labor migration - Adjusted focus on sectors instead of bottleneck professions

#04 - Introduce a temporary 'job switch' mechanism

#05 - Launch a 'productivity challenge'

#06 - Initiate a 'million hours challenge' for the public sector

Strengthening personal competencies

Levers to lessen cross-sector skills mismatch

#07 - Reform the EVC - Prioritize specific competencies

#08 - Expand and facilitate degree funding - Adjusted focus on prioritized competencies

#09 - Reform the upskilling approach - Create 'productivity pathways'

#10 - Review competency-job matching by the regional PES - Objectives and tools focused on productivity

#11 - Expand dual teaching - Cross-sectoral with focus on transversal competencies

#12 - Introduce a mid-career 'competency check'

#13 - Launch a 'training plus' program

Stimulate lifelong learning

Levers to increase learning culture in Flanders

#14 - Start a lifelong learning knowledge network

#15 - Create a tax-friendly saving product for investment in own human capital

Facilitating work

Levers to enable people to work more if they wish to do so

#16 - Launch a 'Job2program'

#17 - Establish a 'HomeSupportCenter'

#18 - Encourage 'ErgoWork'

#19 - Create 'work vouchers'

The levers to boost Flemish labor productivity growth can be grouped into four major clusters
The levers to boost Flemish labor productivity growth can be grouped into four major clusters
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