New data from the latest Productivity Bulletin by the Productivity Commission reveals that productivity among Australian workers has decreased by two per cent in the June 2023 quarter.
The report also highlights that the hours worked among Australians reached a record high to the point that it has outpaced output growth. In particular, output was up 0.4 per cent and hours worked for the whole economy and the market sector increased by 2.4 per cent and 2.2 per cent respectively – the largest quarterly increase on record outside the COVID-19 pandemic.
“Our unemployment rate remains low. Australians worked more in the June quarter as cost-of-living pressures continue to bite,” the Commission’s Acting Chair, Dr Alex Robson, said. “But, even though hours worked rose, the rise in output was more modest, and that shows up as a reduction in labour productivity.
“Productivity growth is about working smarter, not working longer or working harder,” Dr Robson added. “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 also notes that while demand for labour may taper off as interest rates rise and the economy slows, there should not be any reliance on short-term fluctuations in hours worked as a source of long-term productivity growth.
“Our productivity challenge has been urgent for many years,” Dr Robson averred. “We will only see sustainable, long-term productivity growth if we increase investment and innovation.”
The research found 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 at 7.6 per cent, as hours worked increased by 9.3 per cent while output rose only 0.9 per cent.
However, it is the industries of mining; electricity, gas, water and waste services; and information, media and telecommunications that drove about 46 per cent of the overall labour productivity decline:
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.
