Productivity Bulletin December 2024 – Reinvigorating productivity growth is a national priority
Productivity Commission Media Release
Labour productivity declined by 0.5% in the September quarter and by 0.8% over the year, the Productivity Commission’s (PC) latest quarterly productivity bulletin shows.
“The immense disruption from COVID-19 inflated a short-lived productivity ‘bubble’ which has since burst. Labour productivity is now back to where it was during the stagnant 2015 to 2019 period leading up to the pandemic,” said PC Deputy Chair Alex Robson.
“Over the medium to longer term, higher productivity growth also underpins fiscal sustainability.”
Labour productivity dropped in both the market and non-market (or government-dominated) sectors during both the quarter and the year.
“The data underscores the point that reinvigorating productivity is a national priority. Even small changes that make the economy more dynamic and efficient can deliver big economic dividends and add up to major improvements in real wages and living standards over time,” said Dr Robson.
“But it’s not all doom and gloom. Today’s economy is, in some ways, stronger than the pre-pandemic economy was. This is most evident in the jobs market, where Australia now has higher labour force participation and lower unemployment,” he said.
The PC’s latest bulletin also compares Australia’s recent productivity performance to that of the United States.
James Thiris, a Senior Research Economist at the PC, argues that the much discussed ‘great productivity divide’ between Australia and the US – where productivity growth is booming – is not as wide as it first appears.
Mr Thiris argues that this ‘divide’ is partly because Australia and the United States report different measures of headline labour productivity, and in addition must be seen in the context of the very different post-pandemic labour markets in the two countries and the different ways they supported workers during the COVID-19 pandemic.
“Australia protected existing jobs and businesses during the pandemic, which reduced disruption but may have prevented some workers from moving to more productive jobs in a quickly changing economy,” said Dr Robson.
“The US supported workers with unemployment benefits, which led to higher unemployment but may have boosted productivity by allowing unproductive businesses to fail.”
The full December 2024 Productivity Bulletin is available here.
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4 comments
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Bert Hetebry
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leefe
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Bert Hetebry
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Clakka
Return to home pageHow to measure productivity….. every now and again that funny little game comes up where we are asked whether we are robots or not.
Perhaps, going by the employer of the year, Woolworths, the correct answer should be, yes, I am a robot.
As with everything, there is a limit to how high “labour productivity” can go. A human being can only do so much in given time, regardless of tools.
It doesn’t help that the constant push for higher productivity is not accompanied by a proportional rise in pay. Except for the CEOs, of course.
Perhaps productivity is not measured per person as much as a return per dollar paid whether in technology or in wages.
The other matter of course is would the CEO be measured by the same criteria…. oh no, of course not, that measure is based on profit generated, return on investment.
As a tradesman then estimator and then certified quantity survey cum designated expert in productivity in the major civil / industrial construction sector, I can attest that understanding and measuring productivity and the myriad things that can effect it is mind-blowingly complex.
Having spent about 20 years assessing such matters, resulting in 15 dispute claims on productivity (delay & disruption) with an aggregate value of around $1.35b, 1 withdrawn ($1m), 1 to full court proceeding ($65m) the remainder all successfully settled. From these, demonstrably the causation is due to mismanagement by the owner / principal and their management team, as opposed to those seeking to execute / produce the tangible works / product.
Productivity as discussed in politics and government is an econometrics exercise devised by economists. It does not look bottom up and top down to discern the chain of grass-roots cause and effect, yet it most often, by convenience infers it’s a problem of ‘labour’, and is then promulgated as a problem caused by those seeking to execute the tangible works, where in fact it is that ‘labour’ that has been hamstrung by those above, especially the owner / principal and their management team.
It’s the old capital vs labour chestnut, and of course over the last 30+ years it increasingly has its roots in competition for, and the flow of capital.