Kiwis work more hours, produce less GDP

Tamaki Makaurau - The Productivity Commission states productivity is about working smarter rather than working harder, but in comparison to other nations, this isn’t what New Zealand is doing.

In 2019, New Zealanders worked more hours and produced less gross domestic product (GDP) per hour in comparison to the Organisation for Economic Co-operation and Development (OECD) average.

This has been the case for decades, the laid back culture and relatively smaller amounts of capital investment compared to other countries, has led to the growth of Kiwi productivity lagging behind. 

It has prevented us from securing living standard improvements as quickly as other countries. Apart from anything else, wages and salaries are low. Covid has only further pronounced these issues within the economy, with the need for improvements growing. 

The most recent release of New Zealand’s productivity statistics from StatsNZ captures the initial phases of covid, excluding the delta and omicron variants.

The results show varying impacts across industries, but for the year ended March 2021, New Zealand’s labour, capital and multi-factor productivity growth has continued to be slow. 

Labour productivity measures the output of individuals per hour worked and, in 2021, labour productivity increased by 0.5 percent. This increase came as a result of a 2.6 percent decrease in hours worked outweighing a corresponding 2.2 percent decrease in labour outputs. 

This means that New Zealand’s already slow labour productivity growth, has slowed even further. Labour productivity of the measured sector, which covers around three quarters of total industry contribution to GDP.

Breaking labour productivity down further, there has been notable decreases in some industries, with labour productivity in goods-producing industries decreasing by 1.4 percent in 2021. This was largely driven by an 8.8 percent decrease in labour productivity in electricity, gas, water, and waste services. 

Furthermore, some service industries suffered significant decreases in labour productivity in 2021.

These include:
•    Administrative and support services, with a 10.8 percent decrease
•    Transport, postal, and warehousing, with a 10.7 percent decrease
•    Information media and telecommunications, with a 10.7 percent decrease.

Meanwhile, some other industries experienced notable increases to labour productivity, highlighting the varying impact covid had on productivity in the economy.

Industries such as, retail trade (8.3 percent increase) and accommodation and food services (8.6 percent increase), experienced increases to labour productivity. 

Capital productivity measures the amount of economic output which is generated per unit of capital investment, such as investment in land, buildings and machinery.

After a 0.2 percent decrease in 2020, New Zealand’s capital productivity increased by one percent in 2021, Wellington social economist company Berl says.