Kiwis may be working longer but they are producing less, according to a Productivity Commission report.
In comparison to their counterparts in OECD New Zealanders are produce about 20% less output per hour worked, despite working 15% longer. This has left the country languishing in the lower third of developed countries for labour productivity and on par to that of Slovenia and Israel.
The commission’s report - Productivity by the numbers: The New Zealand Experience - shows that not only does New Zealand have a low level of productivity; it also has one of the OECD’s lowest rates of productivity growth.
The report states that since the 2000s, growth in labour productivity – the efficiency of converting resources into economic output – has stalled.
"The available evidence indicates that the productivity performance of most New Zealand industries does not compare well internationally," the report said.
Written by Paul Conway and Lisa Meehan, the report also highlighted a severe shortfall of the country in comparison to Australia.
"Even within the same industries, New Zealand's productivity lags Australia over most of the economy," the report said.
While growth in labour input over the past four decades has been “remarkably similar” between the two countries Australia had outperformed. Of 10 industries where New Zealand’s labour productivity levels were lower than Australia’s in 1997, only three had caught-up or narrowed the gap by 2010 – other services, information media and telecommunication and manufacturing.
In New Zealand, the report found for productivity gains the IT, telecommunications and finance sectors "punch above their weight". However, poor performances by the transport and agricultural, forestry and fishing industries dragged down overall growth.
With no signs of the country “catching up” towards higher productivity countries the report said it raises serious concerns about the “extent to which new technologies and work practices developed off-shore diffuse into the New Zealand economy”.
It concluded that the findings underscored the need for the country’s policy environment to be strongly supportive of productivity growth and for firms to have a clear focus on improving productivity.
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