PC - Measuring productivity performance

Question

Senator HUME: Can I ask about the preferred method of measuring productivity. There have been a few variations, not necessarily from the commission. Is the commission's preferred measure for assessing productivity performance GDP per hours worked? Is it market sector labour productivity? Is it multifactor productivity? Is it another measure? Ms Wood: We look at a mix. We typically look at the labour productivity numbers, which is GDP per hour worked. The total factor productivity numbers come out once a year, and we also look deeply at those when they're released. That tells us something slightly different; it's really about technological change and the sort of things that aren't picked up by shifts in labour and capital stock. You tend to look at a range of different measures to understand what's actually going on with productivity in the broader economy. Senator HUME: On 2 March this year, the commission said: Australia's labour productivity growth continues to disappoint- and that it remains below long-term averages. Does the March quarter national accounts data strengthen that assessment, or is it consistent with that assessment? Ms Wood: It's consistent. If I look at the annual figure, which is our preferred way to look at it, given the volatility in the quarter numbers, it's still low compared to the long-term average. Senator HUME: What's the driver of the March quarter fall in labour productivity? Ms Wood: It's the increase in working hours that hasn't been matched by a commensurate rise in output. Senator HUME: On notice, can you point me to where I can find a disaggregation of how much the fall reflects weaker output growth or more hours worked, because surely it's the interaction of the two. Ms Wood: It's the interaction of the two. There are figures on hours worked in the national accounts, which went up, and output did not increase as much.

Answer

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Documents

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• SQ26-000486 BET206 - PC - Measuring productivity performance.pdf (opens in a new tab)