BCG Henderson Institute

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A boost to productivity growth is a commonly cited macroeconomic silver lining of the COVID-19 crisis. After lockdowns and social distancing forced consumers and firms to adapt to digital channels, even for services a credible narrative of a productivity tailwind has emerged.

When such a structural tailwind is considered alongside the cyclical productivity gains associated with tight labour markets (periods in which firms struggle to find workers and speed their technological investment) it is tempting to expect much higher growth.

However, as productivity narratives proliferate it is important that policymakers, investors, and business leaders remain realistic about the macroeconomic upside. Clearly, something is stirring at the microeconomic level but extrapolations to the macroeconomy are treacherous and exuberant expectations could come at a cost.

To develop a realistic understanding of the potential we should investigate what role services play in aggregate productivity growth; what constitutes a transformative growth boost; and what unseen hurdles are slowing the growth of service sector productivity in the post-COVID economy.