GDP per capita is among the highest in the OECD, and the level of productivity is high. However, Luxembourg is one of the very few OECD economies recording a decline in multi-factor productivity over the period 2010-2022, largely due to weak productivity growth outside of the financial sector. Residents’ engagement in the labour force is slightly below the equivalent in most OECD countries.
Increasing investment, including in research and development to support innovation in firms, and hastening the adoption of digital technologies would boost productivity growth. Raising the number of skilled workers, including by expanding access to adult training, increasing housing supply, and improving the integration of cross-border workers, would support incomes and growth as well as the sustainability of the social protection system. Reducing product market regulations, especially in professional services, would bolster economy-wide productivity.
