Insufficient innovation in private sector blamed for weak productivity

according to a study published Tuesday by two of the country's leading economic research bodies, reported Xinhua.

The study by the Research Institute of the Finnish Economy (Etla) and the Labor Institute for Economic Research underlines that economic growth and well-being depend on productivity. However, during the past decade, productivity growth in Finland has been weak.

The study investigated the reasons behind productivity differences between Finnish companies, and the kind of measures needed to speed up productivity growth.

Only 1.5 percent of the Finnish companies that reached the domestic productivity threshold remained there continuously for at least five years between 2000 and 2020, according to the study.

Companies have failed in taking sufficiently large technological leaps to maintain a productivity advantage in the longer-term, explained Heli Koski, Etla's research director, who led the research project.

In companies that remain at the forefront of productivity, owners and employees are younger and more highly-educated, she added.

Almost two in three companies in the highest productivity category said that lacking skilled employees hinders innovation. The greatest skill shortage was seen among ICT experts, as well as experts in natural science, technology, business and administration.

The researchers suggested that the best way to support the productivity of Finnish companies is to allocate research and development funding to companies capable of radical innovation.

There is also a need to boost funding to improve research and teaching in higher education, promote work-based immigration and competitive markets, and invest in productivity-enhancing technologies, the study said.