Productivity commission urges more privatisation

Improving productivity could lead to GDP gains of at least ten billion kroner by 2020, expert panel says

Parliament looks to be heading towards another heated discussion about competition after the government-appointed panel looking into ways to improve the nation's competitiveness presented its second round recommendations yesterday calling for greater privatisation.

The report called for the elimination of unnecessary regulation, increased competition in the service sector and liberalisation of protected industries.

Peter Birch Sørensen, the head of the Produktivitetskommission, said the proposals would greatly help improve productivity and stimulate the stagnant economy.

“The recommendations are about improving competition and removing redundant regulations,” Sørensen told Berlingske newspaper. “If lawmakers decide to follow the recommendations GDP would increase by at least ten billion kroner by 2020.”

Among the recommendations, the commission highlighted three it said would greatly benefit from improved productivity. The first was to change zoning laws to allow for larger retail spaces than is possible today, the second involved privatising a number of rail lines and the third called for limiting the practice of companies preventing employees from working for competitors. 

“We must make it easier for people to develop professionally and move to new companies. We must ensure that our competition law and other laws serve as catalysts for competition and open up industries that today are sheltered from competition,” Sørensen told Berlingske.

The business and growth minister, Annette Vilhelmsen (Socialistisk Folkeparti), was hesitant to accept the findings.

“The recommendation should be taken very seriously. We want to modernise legislation, but we do not want to liberalise it,” Vilhelmsen told Jyllands-Posten.

Opposition party Venstre (V) welcomed the report, but admitted it would be difficult to implement the proposals due to their considerable scope and lack of political will.

“We hope that the government will take the report into consideration and get to work,” Kim Andersen, a Venstre spokesperson, told Jyllands-Posten newspaper. “Politically, we would be very accommodating because we see the sense in this.”

Lacklustre productivity has been a significant factor in slowing economic growth since the middle of the 1990s, according to the report.

Factfile | Productivity proposals

The Produktivitetskommission report, which can be viewed here (in Danish), offered several core recommendations, including:

  • Competition law should be set to a similar level to the best practices of other EU members
  • A commission should be set up to work on strengthening institutional framework for competition and consumer authorities in order to improve their impact and independence
  • Laws governing labour market clauses such as competition, customer and employment clauses, should be relaxed to drastically reduce opportunities to use them
  • National product standards should be replaced by international standards where possible
  • Denmark should work towards the removal of import quotas and tariff rates from non-EU imports
  • Ownership restrictions should be removed where possible
  • Regulations that prevent economies of scale in the land transport sector should be relaxed

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