Juuso Vanhala

Unprofitable firms occupy economic resources and slow down productivity growth.

The few ‘superstars’ of high productivity and profitability stand out in the large mass of firms. A one-size-fits-all economic policy is unsuitable in an environment of considerable heterogeneity in productivity and profitability.

Among the set of new firms there are those known as ’gazelles’, firms that rapidly increase their employment. This small group of high-growth firms generates a disproportionate share of new jobs.

One reason behind the shortage of new jobs is the lack of new firms, which create the largest number of jobs. The frozen labour market will slow restructuring of the economy and weakens the outlook for growth.