Showing posts with label productivity. Show all posts
Showing posts with label productivity. Show all posts

Wednesday 11 October 2023

Productivity State of Play September Quarter 2023: Australia has been running hard just to stand still this year - but the fault doesn't lie with the workforce

 

Australia experienced a large decrease in labour productivity for the whole economy (-2.0%) and the market sector (-1.7%) in the June 2023 quarter, resulting in an expected 3.2% fall in annual productivity from 2021-22 to 2022-23. This is largely because hours worked increased more than output.” [PC productivity insights: Quarterly productivity bulletin — September 2023]


There’s been a decrease in labour productivity reported in the Productivity Commission’s Bulletin of September Quarter 2023, but the villains of the piece are not workers per se.


The June quarter covering 1 April to 30 June 2023 saw a convergence of factors influencing productivity which were outside the influence of the Australian workforce.


Generally, a tighter labour market reaching an historically high employment level in that quarter meant that more hours were being worked. However hiring practices do not necessarily mean businesses were taking on highly skilled labour or that there was always a large pool of highly skilled workers available to particular businesses - which when combined with a weakening retail demand for certain goods due to high cost of living pressures continuing to limit household purchasing choices - meant that productivity slowed.


At industry level the Productivity Commission made no mention of wages or days lost to industrial action as being factors in June Quarter 2023 productivity decline.


Adverse weather combined with planned maintenance were the principal reasons leading to a decrease in iron ore mining and oil and gas extraction which saw that sector report 15.3% of the overall Australian productivity decline


The mining industry reportedly began to stagnant during the first two years of the COVID-19 pandemic and 2021-2022 & 2022-2023 saw heavy rain and floods disrupted mining operations as well as the transportation network for coal movement and mining workers.


Productivity declines in electricity, gas, water and waste water services sector, combined with declines in the information, media and telecommunications sector, accounted for another 30.6% of the total productivity loss recorded in the June quarter.


Electricity, gas, water and waste water services sector apparently continuing an average negative annual productivity growth established in 2020-21 and, Information, media and telecommunications seemingly heading towards falling short of the productivity level recorded in 2021-22.


One has to suspect one of these three sectors – electricity, gas, water & waste water services – may be suffering less from environmental factors and more from boardrooms in that sector displaying both an overattachment to legacy infrastructure and a lack of appetite for genuine innovation.


Australian Government Productivity Commission, Quarterly Production Bulletin – September 2023, released 10:30pm AEST, 10 October 2023:


Productivity decreased by 2% in the June 2023 quarter, as record-high growth in hours worked outpaced output growth, according to the Productivity Commission’s latest Productivity Bulletin.


Our unemployment rate remains low. Australians worked more in the June quarter as cost-of-living pressures continue to bite. But even though hours worked rose, the rise in output was more modest, and that shows up as a reduction in labour productivity,” Acting Chair Alex Robson said.


The report finds that while output was up 0.4%, hours worked for the whole economy and the market sector increased by 2.4% and 2.2% respectively – the largest quarterly increase on record outside the COVID-19 pandemic.


Productivity growth is about working smarter, not working longer or working harder. Negative productive growth means that on average, Australians worked more hours just to produce and buy the same amount of goods and services. In other words, Australians have been running to stand still.”


The report suggests that while demand for labour may taper off as interest rates rise and the economy slows, we can’t rely on short term fluctuations in hours worked as a source of long-term productivity growth.


Our productivity challenge has been urgent for many years. We will only see sustainable, long-term productivity growth if we increase investment and innovation,” Dr Robson said.


The research finds that 15 out of 19 industries experienced a decline in labour productivity over the 2023 June quarter.


The arts and recreation services industry saw the largest decline in productivity (-7.6%), as hours worked increased by 9.3% while output rose only 0.9%.


However, three industries drove about 46% of the overall labour productivity decline: mining; electricity, gas, water and waste services; and information, media and telecommunications.


The mining industry alone made up around one-third of the total labour productivity decline, as hours worked increased while output significantly declined. The decline in mining output was mainly driven by a decrease in iron ore mining and oil and gas extraction, as adverse weather and planned maintenance reduced production capacity.


[END]


Wednesday 17 July 2019

No you weren't imagining it - wages are stagnating in Australia


Whenever the Fair Work Commission reviews the minimum wage, one of those making a submission* to keep any increase in the minimum wage a modest one will be the Abbott-Turnbull-Morrison Government.

By way of example:
https://www.fwc.gov.au/documents/sites/wagereview2014/submissions/ausgovt_sub_awr1314.pdf
First 5 points in a 12 point statement of Australian Government's position
https://www.fwc.gov.au/documents/sites/wagereview2015/submissions/austgov_sub_awr1415.pdf


This is the result.......


As the asset-driven wealth gap has widened, incomes generated by employment have failed to keep up.

Average weekly disposable household incomes have grown just $44 over the past decade. In the four years to 2007-08, average weekly household incomes grew by $220. They dipped in the immediate wake of the global financial crisis before reaching $1067 in the 2013-14 survey. They fell in the next survey and rose $8 a week to $1062 in the 2017-18 survey.

In NSW, those in the lowest 20 per cent of income earners have seen their incomes go backwards in real terms since 2015-16, from $412 a week to $397 a week. They are only $6 a week higher than in 2011-12. The biggest increase has been for people in Tasmania, where disposable incomes jumped $83 to a record-high $922, with households across all income ranges boosted. The largest slump has been in Western Australia, where disposable incomes are $157 lower than their peak in 2013-14. [my yellow highlighting]

However, lest Australian voters seek to blame the Abbott-Turnbull-Morrison or any employer lobby group for paltry wages growth, the Australian Treasury and participants at a recent conference organised by the rather esoteric Economic Society of Australia - est. in 1925 and delighting in producing articles such as "Community and Expert Wine Ratings and Prices" and "Non‐monotonic NPV Function Leads to Spurious NPVs and Multiple IRR Problems: A New Method that Resolves these Problems" - have rushed to the defence of both government and the business community.

With Treasury in particular pointing a finger at employees, who are reluctant to quit their current jobs and chance their arm in an uncertain labour market, as a possible cause of low wages growth.  
So there you have it. Despite both the federal government and employer groups constantly pushing to limit wages growth, it's really the fault of workers. 

Regardless of the fact that productivity growth mainly from workers' efforts has averaged 1.4 percent a year since the end of 2010 having risen at a relatively steady rate since 1991.

Note:
* See https://www.fwc.gov.au/awards-agreements/minimum-wages-conditions/annual-wage-reviews/annual-wage-review-2017-18-3. Go to right hand sidebar, open a wage review link, select Submissions &  then click on Initial Submissions.