Productivity in Sweden, measured as GDP per hour worked, has in recent decades been among the highest in the world. The fact that Swedish wealth measured as GDP per capita is still not among the highest in the world, according to the SNS Economic Policy Council 2024, is due to fewer hours worked.
Productivity in Sweden has since the financial crisis of 2007–2010 grown at a slower rate than before, just as in many other OECD countries. From an international perspective, however, it has been high. Productivity has primarily been driven by improvements within existing companies, especially companies getting new owners, such as new subsidiaries in Swedish and foreign groups. This represents a clear difference from the situation in the 1990s when productivity was rather driven by new, productive companies being launched while older, less productive ones closed down. This is what the researchers in the SNS Economic Policy Council 2024 write in their report Productivity Growth in the Swedish Business Sector.
“We have analyzed a large amount of unique data from Swedish companies and see that productivity these days is mostly driven by underperforming companies being acquired by other companies and subsequently streamlined. In the report, we present some twenty proposals to further increase productivity,” says Lars Persson, professor of economics and chair of the SNS Economic Policy Council 2024.
The researchers also show that differences in productivity have increased significantly between different industries and companies. For example, productivity is rapidly increasing in construction and information companies but at a significantly slower rate in the financial and real estate sectors. Nevertheless, productivity in the construction sector is still far below that of the majority of other industries.
At the same time, the Swedish business sector is becoming increasingly immaterial. In other words, there is a trend away from physical assets such as equipment and machinery to soft resources such as knowledge and customer relationships, where the bulk of investments today go to soft resources. The industries exhibiting the fastest productivity growth are at the top when it comes to investments in intangible assets. Hence, the researchers are calling for measures aimed at such initiatives not being put at a disadvantage, such as loan- and equity-based financing of companies being treated more equally.
“It is more difficult to use intangible assets as collateral for bank loans. At the same time, borrowed capital currently entails tax advantages compared to equity-based capital. This, in turn, creates a distortion that may hamper productivity,” says Lars Persson.
The SNS Economic Policy Council also highlights the importance of safeguarding good conditions for competition. Sweden must seek to ensure that international competition rules are applied effectively so that Swedish companies compete on an equal footing in the global market. In addition, the researchers emphasizes that employees in the business sector should have better opportunities to engage in further training throughout their entire career.
about the SNS Economic Policy Council
Each year, SNS appoints a group of researchers who, referred to as the SNS Economic Policy Council, analyze how the Swedish economy operates over time in relation to key issues. Based on their conclusions, the researchers make recommendations to politicians and occasionally to other decision-makers as well. The SNS Economic Policy Council has existed since 1974 and more than a hundred researchers have participated so far. The authors of these reports are responsible for analyses, conclusions and suggestions. SNS as an organization does not take a position in relation to these.
about data in the report
The empirical analysis in the report is based on data covering more than 620,000 companies, with a total of 5.5 million observations over the period 1998–2021. The data come from the Swedish Companies Registration Office, Statistics Sweden and Bisnode.
about the authors
Lars Persson (chair) is a professor of economics and works at the Research Institute of Industrial Economics (IFN)
Karin Edmark is an associate professor of economics and lecturer at the Swedish Institute for Social Research (SOFI), Stockholm University
Pehr-Johan Norbäck is an associate professor of economics and works at IFN.
Erik Prawitz has a PhD in economics and works as a lecturer at Linnaeus University.