Europe’s economy has experienced seemingly high productivity over the past decades, due largely to the massive capital investments in various sectors. However, the real issue is Europe’s productivity growth rate (how quickly we’re improving our productivity).

Over the recent years, Europe’s productivity has been lower then China’s and India’s productivity growth rate. Europe doesn’t fare any better when compared to countries around the world. As an economy, we start to lag behind, but on the macroeconomic level, Europe’s prospects remain very rosy, but from a microeconomic perspective our performance is of serious concern.

Compared to other developed economies, Europe has weakening labour productivity growth and sliding real income growth. Concerns about weak productivity growth will only intensify as structural changes in the global economy shift the engines of economic growth to China, India, and Brazil.