Support services are a vital component of a growing economy. Services generate more than 2/3 of global GDP and account for most employment in developed economies. This means service sector performance is a critical requirement for economic growth. The scope of the services sector is vast and includes value added from wholesale and retail trade (including hotels, restaurants and supermarkets), transport, telecommunications and post, electricity, government, financial, professional (doctors, dentists, lawyers, teachers, accountants etc.), sport, entertainment and personal services such as education, health care, and real estate services, as well as imputed bank service charges and import duties. Education and healthcare are two of the fastest growing service sub-sectors.
The quality of health care and education services underpin living standards and often facilitate the transformation of countries and people out of poverty. That doesn’t diminish the role of other sectors (e.g. resources, agriculture, and manufacturing) which often provide the inputs for the service sectors like transport. Recent (2013) OECD research (Nordas and Kim) found a strong relationship between services quality and competitiveness across income groups. In low-income countries, the impact of services quality and policy on competitiveness is highest in low-technology industries; in middle-income countries it is highest in medium-technology sectors and in high-income countries the impact is highest in medium-high and high-technology industries. Better services contribute to moving up the value chain in industries where a country already has technological capacity and comparative advantage. Where technological capacity and comparative advantage are constrained more effort is required to improve competitiveness including, for example, more competition and stimulation for innovation to make the changes. International trade in services can stimulate many of the drivers of innovation including new ideas, adoption of new technology and changes in work practices.
What can we do to enhance service sector efficiency?
● Benchmark service sector and service sub-sector efficiency and regulations against comparable countries.
● Identify regulatory constraints and measures to enhance service sector performance.
● Examine delivery of services to regional areas and identify potential interventions to enhance service access and delivery in regional areas.
Our approach to service sector performance
To manage a sector or sub-sector better it’s essential to be informed and that requires measuring the things that drive and constrain it. Improved transparency and data quality are required to understand the competitiveness of the service sector and all of its components.
Service sector examples
●Evaluation of efficiency and costs of different ports for moving shipping containers out of NSW in Australia.
●Evaluation of carbon footprints (through life cycle assessments) for moving horticultural products by sea transport versus air transport.
●Evaluation of the impact of taxation of telecommunication devices and use of telecommunication services on users with different income levels.
●Evaluation of the carbon footprint from wholesale and retail food markets.
●Evaluation of role of retail food services in food security.
●Numerous other studies of specialized services.
Interesting links for services sector efficiency
http://www.oecd-ilibrary.org/trade/the-role-of-services-for-competitiveness-in-manufacturing_5k484xb7cx6b-en
http://www.oecd.org/trade/services-trade/towardsaservicestraderestrictivenessindexstri.htm
http://www.eib.org/attachments/efs/efs_innovation_and_productivity_en.pdf
http://www.ipa.ie/pdf/cpmr/CPMR_DP_35_Measuring_Public_Sector_Productivity_Lessons_from_International_Experience.pdf
http://www.serviceskills.com.au/sites/default/files/Productivity%20in%20the%20Service%20Industries.pdf