Category Archives: Productivity

Is the 20-hour work week the way of the future? – Frank Chung. 

According to the UK-based New Economics Foundation, which first proposed the idea in 2010, a “normal” working week of 21 hours could help address a “range of urgent, interlinked problems”, including “overwork, unemployment, over-consumption, high carbon emissions, low wellbeing, entrenched inequalities, and the lack of time to live sustainably, to care for each other, and simply to enjoy life”.

Globally, the push to hit the brakes on out-of-control workloads is gaining steam, with a number of countries experimenting with, and reaping productivity benefits from, reducing hours.

“I thought if we could just cancel Monday and Friday, and use that time to sit in a cafe, interact with people, actually get out in the world, we might do better work.”

NZ Herald

Growth! What Growth? Bernard Hickey: Get real! Work rate drives wages.

Productivity Growth = Wage Growth. It’s that simple. Working smarter is the only way. 

So what was the point of economic and jobs growth again?

It’s worth asking this obvious question after this week’s apparently stonkingly strong set of jobs figures.

They showed an extra 35,000 jobs were created over the September quarter and that employment has grown 179,000 or 7.7 per cent over the last two years.

The unemployment rate also fell to 4.9 per cent in the September quarter, which is its lowest rate since the Global Financial Crisis in December 2008.

Those numbers looks terrific at first blush and are certainly much better than jobs falling by 179,000 and the unemployment rate rising.

But a closer look shows the number of unemployed actually rose by 1000 to 128,000 over that two-year period and the number of 15 to 24-year-olds who were Not in Employment, Education or Training (NEET) rose by 3000 to 74,000.

Astonishingly, even construction industry annual wage inflation was barely over 2 per cent in the September quarter.

All these numbers should drag everyone back to the ultimate conclusion:

It’s always, always about productivity.

On this measure, New Zealand’s record is awful, and especially since 2012. Real GDP per hour worked has basically flat-lined over the last four years.

Our record is almost as bad over the last 45 years. We have been the second worst country in the OECD for real GDP per hour worked over that period. Worse than Italy, Portugal and France – all of whom are now seen as basket-case, stagnant economies

Basically, we have kidded ourselves that we are richer because there are so many hours being worked by so many people and house values have almost doubled in the last eight years.

The rise in value of New Zealand’s houses to $1 trillion last month has made home owners feel much richer. These values have nothing to do with real incomes. They are all about high net migration, under-building and lower interest rates.

Renters, the young, the unemployed and the under-employed certainly don’t feel the joy of this burst of growth. A much better aim for any Government or business would be to increase real output per hour worked and real hourly wages.

That would really be going for growth, as opposed to the growth we’re kidding ourselves about at the moment.

NZ Herald 

Worldwide productivity is grinding to a halt – Satyajit Das. 

Thomas Malthus was wrong for one simple reason. Humans have survived his 1798 forecast that growing populations wouldn’t be able to feed themselves because innovation and productivity gains allowed them to produce more and more with the same amount of labor and capital: Irrigation, fertilizers, higher-yielding plant species and mechanization have enabled farmers to grow 5 to 6 times the amount of grain from the same piece of land as a century ago. The problem is that similar productivity gains may no longer be possible – or effective.
There’s also general agreement that productivity gains are flatlining. In advanced economies, productivity growth has fallen below 1 percent annually, significantly lower than the 3 to 4 percent common in postwar decades and even less than the 2 to 2.5 percent of the last decades of the 20th century. Similar trend lines are beginning to appear in developing nations. Combined with stagnant or declining workforces, slowing productivity gains are a key factor suppressing growth worldwide.
What no one can agree on is why this is happening.

NZ Herald