Labour productivity growth has been negligible since the crisis. In part this reflects a compositional shift towards low-productivity sectors, such as tourism. Toughen competition policy and lower legal barriers to entry would boost productivity growth and make growth more inclusive.
- Adopt a whole-of-government productivity agenda to follow up on the priorities identified by the recent growth forum.
- Toughen competition policy implementation. Use the OECD’s Competition Assessment Toolkit to refine law and enforcement.
- Reduce the licences and permits required. Reduce legal barriers to entry in the electricity, air transport, airport and sea port sectors. Remove capital controls which deter foreign investment.
- Support innovation by encouraging links with universities. Ease funding access, notably with public investment funds.
- Introduce performance indicators to identify government programmes that work.
Source: OECD May 2017 Economic Outlook database
McKinsey&Company (Autumn 2012) , Charting a Growth path for Iceland.
OECD (2015), Boosting productivity through greater competition, Iceland Policy Brief.
Productivity - enhancing institutions
There is no single institution in Iceland dedicated to productivity issues. The Prime Minister’s Office takes an active interest and supports the work of the Growth Forum, which is a group of politicians, social partners, business people and academics who discuss productivity issues.