Talk about inconvenient truths. The Productivity Commission’s latest “productivity bulletin” released overnight strangely prompted no comment from major employer groups, which are usually champing at the bit to talk about poor productivity and the urgent need for “reform”. And the coverage in the business press was strangely muted.
For a report showing a big fall in productivity — 2% in the June quarter and 3.2% in the year — where were the lamentations of woe and the calls for tax cuts, fewer industrial relations protections and deregulation?
For a start there was the complication that it also showed Australian workers working longer hours than ever before. The record number of hours worked was “predominantly a result of employed workers working longer hours rather than an influx of new entrants”. So much the business narrative — see property bro Tim Gurner and regular business whingers about working from home — that lazy workers aren’t putting in the effort.
But why had productivity fallen? Because output only increased by 0.4% when hours worked increased by 2.4%.
Why had output grown so slowly? For that you have to look at individual industries, and most especially mining. Mining isn’t a big employer, but because its productivity is so high, changes in productivity in mining have a disproportionate impact on economy-wide productivity.
What happened in mining? Over to the PC:
The mining industry alone made up around one-third of the total labour productivity decline. Although hours worked increased, there was a large decline in mining output — and associated with that, a large decline in labour productivity. 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.
Wait — so it was weather and management decisions about maintenance that led to reduced productivity, not restrictive industrial relations laws or company tax rates? It was nothing to do with lazy miners, or Labor’s proposed laws for equal pay for equal work?
What about other industries? “[T]he wholesale trade industry had a small increase in labour productivity in the 2023 June quarter, but had the second-largest fall in labour productivity throughout 2022-23, averaging a 2.5% decrease over the past four quarters,” the PC reported. Sounds serious. Time for some deregulation? Erm, no: “This decline was due to an increased number of hours worked, accompanied by stagnating output growth because of weakening retail demand for some goods.”
So all those interest rate rises championed by The Australian Financial Review led to weaker demand and thus to productivity falls. Be careful what you wish for, eh?
It points to a broader truth that is ignored by the self-interested participants in the debate over our “productivity crisis”: many of the most important factors have nothing to do with what business claims are the biggest problems in productivity.
Weather, for instance, plays a huge role in productivity — not merely in mining but in another key export sector, agriculture, as we’re likely to see going into an El Niño that will hurt output from that sector (not forgetting that the climate crisis will inflict ever more extreme weather on us). A slowing in growth across the economy — unless employers start sacking workers en masse immediately — will mathematically lead to lower productivity, as we’re seeing now. And management decisions around use of capital will always play a direct role.
Not that any of this will stop most of the participants in the “productivity debate” from continuing to engage in bad faith. For them, it’s always lazy, overpaid workers and too much company tax.
Because when business says “productivity”, they actually mean “profit”.
But of course; how is the mining sector so ‘productive’?
Simply by pillaging what belongs to us all, particularly the biggest stakeholder – future generations – and leaving the mess for someone else to clean up, while making off with the proceeds like bandits. And do they even pay any tax?
When Business discusses productivity, they mean lower wages, more labour market de-regulation, tightened industrial relations legislation (read more anti-worker and anti-union) legislation than the FWA (Aaka WorkChoices ‘lite’), more targeted (read Coolie) immigration, special lower rates of pay for youth, government support for the training that they should provide, reduced company taxes, increased indirect taxes (read consumption taxes) to pay for the education their business needs for their suitable applicants to do their jobs, government subsidised apprentices….you name it. The list is endless. Anything other than business rolling up its sleeves and figuring out how to do things better.
No wonder many of us retired or semi-retired are reticent about working longer. Glad my kids have reasonable jobs.
There is no evidence for the superstition that lowering corporate tax increases productivity at the corporate level. It’s an unconditional handout. Other outcomes are conjectural.
While promoting talking points through MSM where no presenters, journalists or reporters seem to possess essential or critical literacies including maths, data, analysis, research, science and finance/economics, while ‘productivity’ relies on suboptimal (aka Stats 101) headline data and averaging that does not explain anything; too easy to not hold power to account?
So production at the business lobby’s ‘Wizards of Oz Amalgamated Smoke and Mirrors’ is down?
As a poor dumb working stiff that doesn’t know my ass from a hole in the ground, it was too far above me, I could never understand the logic of their ‘Topsy production model’, as sold by business ‘leaders’ – while they increased profits and executive remuneration for sod-all productivity increases themselves :- ‘wage rises for workers dependent on productivity increases every year ad infinitum’? Grafting extra limbs? Having them chained too and sleeping under their machines overnight? ….. But some people seemed to swallow it.
[It’s a lot like this ‘increase immigration to look after our aging population’? …. Who’s going to look after those immigrants as they age?]
…. When do we stop digging?
…. A distraction from their true agenda? …. Their own ‘Penrose productivity stairs’?
This was the exact same thing that WorkChoices investigations into found. Productivity did not go up after it was introduced. All it was meant to do was reduce wages and lower conditions – reduce costs for business basically. Productivity had nothing to do with it. For productivity to increase a business would need to be held accountable for its measure one way or the other. Business is responsible for the carriage of productivity and its measure. Can’t have that. That means investing in training and labour saving and productivity improving technology and thinking about improving work processes. Less business conferences perhaps. Fewer trips to Byron or Bali this year or actually go to Bali instead of Hawaii or employing competent staff not one’s children. There’s a thought. Unless you can invent a cyborg that slices cheese at 1,000 per minute, make a mean cappuccino at a rate of 1/minute, make 1,000 hotel beds starting at 10.00am without stopping and have it all done by midday, can wack up a tofu salad or smash some avocado without making a mess – better leave that stuff to fallible, slow, fractious humans who have the added disadvantage for the boss of desiring to look around for a better job and a better deal.