Many people think wanting higher “productivity” is just a flash way of saying you want production to increase. Wrong. | OPINION by Ross Gittins
Economists and business people talk unceasingly about the crying need to improve the economy’s productivity, but most of what they say is self-serving and much of it’s just silly. Fortunately, this week’s five-yearly report on the subject from the Productivity Commission,It’s the first of several reports and, unlike the tosh we usually get, it’s not selling any magic answers.
A lot of people think wanting higher “productivity” is just a flash way of saying you want production to increase. Wrong. The report makes it clear that improving productivity means producing more outputs, but with the same or fewer inputs.pretty amazing to think about, but it happens all the time.Another mistake is to think that wanting to increase productivity is the bosses’ way of saying they’re going to make us work harder. No, no, no.
It’s pretty clear that, if we’re going to get back to higher rates of productivity improvement, we’ll have come up with some new ideas on how to make the service industries more productive, without diminishing quality.This is significant. It suggests that whatever factors have caused our productivity performance to fall off are probably the same as those in the other rich economies. But as yet, none of them has put their finger on the main causes of the problem.
The quantity of goods we produce in those industries has never been greater, but the number of people employed to produce it all is a fraction of what it once was. And this accounts for a huge proportion of the productivity improvement we’ve achieved since Federation.income – total employment has gone up rather than down as we’ve spent that extra income employing more people to perform all manner of services – from menial to hugely skilled.
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