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00:00 "Productivity is a magical word for the European economy, because it is a year-long
00:08 balance for this economy.
00:10 When we talk about productivity, we are talking about the production of an individual per
00:18 hour, but it is a balance for inflation, meaning the size of each individual's share in the
00:24 economy.
00:25 This number is adjusted for each hour of work and also for inflation.
00:30 Usually, when we have an increase in productivity, this reflects positively in the growth of
00:36 the economy.
00:37 Today, we are talking about the gap in productivity between Europe and the United States.
00:46 Notice that this gap was smaller in the year 2000, and then it continued to increase over
00:55 the past few years, until today it is a gap that is considered to have a statistical level.
01:01 In the past period, we have seen an increase in productivity in the United States.
01:06 This increase over the past few years was about 60%, while in the Euro area it was only
01:12 20%.
01:13 Why do we have this gap?
01:16 First, it is the demographic nature in the United States and how it differs from the
01:21 demographic nature in Europe.
01:23 The American people are a more productive people, which means that they work longer hours
01:28 and produce more.
01:30 While in Europe, the dilemma over the past few decades is that the people do not have
01:37 this gap in a big way, and therefore we do not have long hours of work and we do not have
01:44 this huge amount of productivity.
01:46 This practically explains why Europe opened its doors to many refugees and was very selective
01:55 in choosing age groups, because it tries to attract a larger group of young people to
02:00 society to increase productivity.
02:02 But it is not the only factor.
02:04 The second factor is that America has benefited more from technology.
02:12 Notice that the technology revolution that started in 2000 gave this huge impact to America,
02:20 while it did not give this same impact to Europe, because it did not benefit from it much.
02:26 The third factor is fiscal support.
02:30 The dilemma for European countries has always been that we have a gap between the different
02:36 European countries in the size of the government spending.
02:39 In America, we did not have this problem because they relied heavily on fiscal support to
02:45 support this economy.
02:49 In general, these are the three main reasons that led to the creation of this problem.
02:55 Let us remember that the problem of productivity is not only an economic problem in general,
03:01 but it also affects the work of the monetary policy.
03:04 Because when we see this weakness in productivity, this raises the labor cost, which means that
03:12 the huge pressure will not be greatly reduced, as we see in the United States.
03:19 Let us look at how the situation has changed in recent years in terms of hiring processes
03:27 and working hours in European countries.
03:30 We notice that we had an increase in hiring processes, but this increase in hiring processes
03:36 did not reflect positively as it should on the overall local outcome.
03:41 This is what we are talking about when we talk about a problem in productivity.
03:45 At the same time, we had a decline in working hours, which explains why the working hours
03:54 did not reflect, no matter how large they were, on the economic situation and economic growth.
04:00 The problem in Europe is that European economies are fragmented, meaning that we have countries
04:06 with a very strong economy and countries with a weak economy.
04:10 Countries spend a lot when talking about governments, and their governments do not spend as much.
04:17 This creates this fragmentation, which greatly increases the economic problem that Europe
04:26 faces in productivity regression.