INTHEBLACK February 2025 - Magazine - Page 19
F E AT U R E
Productivity growth in most
developed countries has been
stagnant for many years.
The RBA focuses on two main
measures of productivity:
labour productivity and
multifactor productivity.
Some economists believe
old ways of measuring
productivity do not account
for technological progress.
Made to measure:
Understanding
productivity
Different productivity measures and pursuing ways to lift growth
can potentially help governments and organisations deliver better
business and societal outcomes.
Words Cameron Cooper
As economic indicators go,
productivity is one of the more
attention-grabbing measures. The reason
is clear — productivity growth is seen
as a driver of real wages, purchasing power
and overall living standards.
What exactly is productivity and how
is it measured? The Productivity Commission
— the Australian Government’s research
and advisory body on a range of economic,
social and environmental issues — defines
productivity as “a measure of the rate at
which output of goods and services are
produced per unit of input”. Those inputs
include labour, capital and raw materials.
Like most other central banks around the
world, the Reserve Bank of Australia (RBA)
focuses on two main measures of productivity.
The first is labour productivity, which the
RBA notes is “the output per worker or per
hour worked”. The second is multifactor
productivity (MFP), which assesses the
“output per unit of combined inputs”. Those
units typically include labour and capital,
but can be expanded to account for energy,
materials and services.
MFP provides a more nuanced perspective
on the operational performance of businesses
intheblack.cpaaustralia.com.au 19
