Leonid Bershidsky notes the following in his Bloomberg View column:
“One reason for
Europe's productivity lag is that its labor markets are less flexible than in
the U.S. Despite high unemployment in most European countries since the 2008
financial crisis, firms have been "hoarding labor," because people
are too costly to fire and labor unions too powerful to oppose.
Another cause for weak
productivity growth is that European companies are consistently underinvesting.
Investment by nonfinancial corporations is now 15 percent lower than before the
2008 crisis, although it grew by 1 percent in 2013, finally reversing a
downward trend. Europe's share of global investment in manufacturing fell by 37
percent between 2005 and 2013, a steeper drop than for the U.S. (minus 19
percent) and even Japan (minus 35 percent).”