OECD report: Keep up reforms, but increase productivity

Lack of competition and widening income gap among conclusions in country report

In its country survey released today, the OECD said that Denmark’s weak productivity growth over the past 20 years has led to a widening of the income gap in relation to other OECD countries.

The report singled out boosting productivity has the largest challenge faced by the nation and forecast a GDP growth of 1.6 percent in 2014 and 1.9 percent next year. Those growth projections largely mirror the government’s own expectations. 

“The economy is set to recover gradually as world trade regains momentum and confidence improves,” the OECD report reads. “However, household debt is high and there remain fragilities in the financial sector, which entail risks for private consumption and public finance.”

The report pointed to a lack of competition as a contributing factor to the lack of productivity growth and also singled out “shortcomings in the innovation policy framework” as well as “regulatory hurdles [that] impede competition”. 

READ MORE: EU has rosy outlook on Danish economy 

The OECD looked positively upon reforms pushed through by the current coalition government. 

“Ongoing reforms of compulsory education and of the vocational education and training system will raise the skills of youth and improve transitions to the labour market,” the report stated. “The recent reform of the flexjob and disability programmes should help to better activate skills if adequately implemented.”

Vestager: OECD supports our reforms
Margrethe Vestager (R), the minister for the economy and the interior, said the OECD report confirmed that the national economy was on the right track.

“It’s not going quickly, but slowly and surely the Danish economy is moving forward,” Vestager said in a press release. “I am happy to see that the OECD backs up the government’s economic policies and encourages us to continue along the reform track.”