Pro­duc­tiv­ity not as poor as de­picted

Sunday Star-Times - - BUSINESS / TECHNOLOGY - TOM PULLAR-STRECKER

New Zealand’s track record on labour pro­duc­tiv­ity may look worse than it is be­cause a grow­ing num­ber of Ki­wis are in work, the Pro­duc­tiv­ity Com­mis­sion says.

The coun­try’s slug­gish pro­duc­tiv­ity growth was high­lighted in an OECD re­port into the New Zealand econ­omy in June and threat­ened to be­come an elec­tion is­sue.

Labour fi­nance spokesper­son Grant Robert­son said this month that Na­tional Party leader Bill English’s claim that pro­duc­tiv­ity had grown pretty well in New Zealand was wrong and con­tracted the views of most com­men­ta­tors.

Pro­duc­tiv­ity Com­mis­sion re­search direc­tor Paul Con­way

'The skill level of the av­er­age Kiwi worker fell by 1.8 per cent be­tween 2001 and 2012.' Motu

pointed to re­search from Welling­ton eco­nomics firm Motu.

It sug­gested an­nual pro­duc­tiv­ity growth would have been about 70 per cent higher, av­er­ag­ing 0.24 per cent, be­tween 2001 and 2012, in­stead of 0.14 per cent, were it not for a de­cline in skills as­so­ci­ated with higher em­ploy­ment.

Motu es­ti­mated last year that the skill level of the av­er­age Kiwi worker fell by 1.8 per cent over the pe­riod as more peo­ple joined the work­force.

The neg­a­tive re­la­tion­ship be­tween pro­duc­tiv­ity and labour mar­ket par­tic­i­pa­tion has been ac­cepted by the OECD.

In 2007, it said there were a num­ber of rea­sons one might ex­pect labour pro­duc­tiv­ity to fall as work op­por­tu­ni­ties in­creased.

These in­cluded em­ploy­ment growth in­creas­ing the pro­por­tion of lower skilled work­ers in jobs and the fact peo­ple would be less pro­duc­tive on av­er­age as they worked longer hours.

But the com­mis­sion ac­cepted pro­duc­tiv­ity had been ‘‘com­par­a­tively poor’’ for decades, also blam­ing small mar­kets, low rates of cap­i­tal in­vest­ment and R&D and weak com­pe­ti­tion.

PHOTO: PETER MEECHAM/STUFF

More peo­ple in work is a good thing but makes pro­duc­tiv­ity growth look worse.

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