Productivity analysis – Service sectors in Region Zealand

Productivity in the service sectors in Region Zealand has remained almost unchanged in the past 20 years. However, productivity in manufacturing and primary industries has increased around 2% annually in the region. Furthermore, the productivity in the service sectors in Region Zealand fell behind productivity in the service sectors in the other Danish Regions in the mid-00’s. If Region Zealand’s productivity in the service sectors had increased at the same rate as in other regions, its GDP had been 6% higher today.

The productivity in the service sectors in Region Zealand has not caught up to the other regions since the mid-00’s. We have found two primary reasons for this:

• The most productive service sectors in Region Zealand are also the most constrained and their productivity growth rates have been lower than in the remaining Danish Regions. In particular, the lack of skilled labour and financial constraints are more common in Region Zealand compared to the rest of Denmark.
• There has been a shift in employment towards low-productivity service sectors in Region Zealand, where the three service sectors with the lowest productivity levels have had positive employment growth and two of the four most productive sectors have had negative employment growth.

Despite the low productivity growth, the disposable income in Region Zealand is at the second highest level (only surpassed by the Capital Region of Denmark). This is to a large extent due to the commuting activity by high income earners from Region Zealand to the Capital Region of Denmark.

The study is commissioned by Region Zealand

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