The Treasury and Statistics New Zealand today released a joint research paper drawing on analysis of various measures of labour productivity performance in New Zealand and Australia over the past 40 years.
Taking on the West Island: How does New Zealand’s labour productivity stack up? examines data sets from both countries on economy-wide measures of productivity performance and it examines also data on the so-called measured (or market) sector which capture reasonably compatible information encompassing around 60 per cent of each economy.
The paper sheds light on the relative performance of New Zealand compared with Australia by tackling four issues:
- Measures of economy-wide productivity levels are compared in order to provide insights into per capita GDP disparities between the two countries.
- Official measures of economy-wide productivity growth rates are compared.
- Productivity growth rates are compared for the 12 common industries for which New Zealand and Australia compile official measured or market sector productivity estimates.
- The paper examines why findings on economy-wide productivity growth rates in Australia and New Zealand (as produced, for example, by the Organisation for Economic Cooperation and Development) do not offer identical conclusions to the findings on productivity growth rates as captured in domestically-produced statistics on the measured or market sectors of Australia and New Zealand.
Some of the conclusions of the research include that:
- The gap in economy-wide labour productivity levels, which favours Australia, has remained roughly constant for the past decade at around 30 percent. The paper concludes that most of the measured difference is real with only a small part of measured difference likely to be due to issues around methodological approaches.
- Australia’s economy-wide average annual labour productivity growth rate (1.7 percent) exceeded New Zealand’s (1.4 percent) over the 1978 to 2008 period. Official growth rates were initially similar up to the early 1990s, but Australia’s rate shifted to a higher trend after that time. While Australia’s economy-wide productivity growth rate over the period was stronger than New Zealand’s, the difference is likely to be smaller than published figures suggest once methodological measurement issues are taken into account.
- On the official measured-sector basis, New Zealand’s average annual labour productivity growth rate (2.2 percent) exceeded Australia’s (2.0 percent) over the 1978 to 2008 period. New Zealand’s measured-sector productivity growth rate was generally higher from the late 1980s through until the mid 1990s, but has otherwise been similar to Australia’s over the period under review.
- Over the period examined most closely, 1988-2008, New Zealand’s measured-sector growth rate was very marginally ahead of Australia’s corresponding sector.
The paper is a joint paper between the New Zealand Treasury and Statistics New Zealand. Statistics New Zealand provided technical advice around data and methodologies so as to inform the analysis. The analysis and interpretation were provided by the Treasury. The paper is available on both departments’ websites [www.treasury.govt.nz and www.stats.govt.nz]. Because the paper deals with productivity measurement issues, it appears on the Treasury website under the New Zealand Treasury’s Productivity Paper (TPRP) series.
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