INTHEBLACK February 2025 - Magazine - Page 22
F E AT U R E
are getting cheaper. It doesn’t appear at
all as productivity growth in Australia.
It appears technically as a favourable
terms-of-trade shock.”
Jarvis remains a fan of productivity
as a metric, stating that it offers a consistent
and indispensable point of reference for
understanding how the Australian economy
and its industries are changing.
“There will always be challenges and
limitations around the measurement
of productivity, which the ABS addresses
through improvements in data and methods,”
he says. “It continues to be important
as a key long-term measure of change
in the economy.”
LABOUR PRODUCTIVITY
GROWTH IN OECD
COUNTRIES (%)
1980 to 2005
-2
-1
2005 to 2019
0
1
2
3
4
0
1
2
3
4
Ireland
Turkey
Finland
Japan
Norway
CAN WE LIFT PRODUCTIVITY AGAIN?
The consensus is that it will not be easy
to lift productivity growth.
In Australia, the Productivity Commission
is pinning its hopes on five key themes —
building an adaptable workforce; harnessing
data, digital technology and diffusion;
creating a more dynamic and competitive
economy; efficiently delivering government
services and securing net-zero greenhouse
emissions at least cost. It adds that a
services-based economy requires investment
in better teaching and innovation in
educational institutions. Better-targeted
skilled immigration could also make
a difference.
According to Quiggin, the most hope
for productivity growth rests with
“technological progress”.
“We could see some very big improvements
from artificial intelligence,” he says.
“What we won’t see, I think it’s safe to say,
is big improvements in productivity in the
goods-producing sector of the economy,
because no country in the rich world has
seen that. We’ve picked all the low-hanging
fruit there.”
Jarvis adds that some economists
believe low job mobility, especially among
younger workers, could make it harder
for businesses to become more efficient
and productive. ABS figures from July 2024
show that Australia’s job mobility rate
has fallen for the first time in three years,
back to its historically low level just before
the pandemic.
This is despite predictions that COVID-19
would lead to the Great Resignation as people
re-evaluated their lives and careers after the
22 INTHEBLACK February 2025
UK
France
Luxembourg
Denmark
Germany
Sweden
Belgium
US
Portugal
Iceland
Austria
Greece
Australia
Spain
Netherlands
New Zealand
Italy
Israel
Switzerland
AVERAGE
-2
-1
Source: 5-year Productivity Inquiry: Keys to growth,
Australian Government Productivity Commission
