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The trans-Tasman productivity slide

Productivity matters to developed economies. It also matters to their workers. Measuring worker sentiment around productivity and recognizing what they see as the biggest barriers and opportunities is critical to tracking the progress of productivity improvement in developed economies.

The bad news is the personal productivity of Trans-Tasman workers has fallen over the past year with a significant proportion of Australian (33 per cent) and New Zealand (30 per cent) workers believing their role is unlikely to exist in 20 years’ time due to emerging digital technologies and automation.

"There is a contrasting economic feeling between the two countries with an atmosphere of pessimism in Australia compared with New Zealand’s more positive disposition."
Bill Farrell, Advisory Regional Managing Partner at EY

Using Ernst & Young’s bespoke  EY Productivity Pulse™ (the Pulse),  on a 10 point scale, Australia’s average productivity has settled at 7.6 down from 7.7 at the end of last year. In New Zealand, it has fallen from 7.5 to 7.4.

The Pulse measures Australian and New Zealand workers’ views about their organisation’s and their own productivity. It is based on a survey of employees spanning seven industries and from all levels within organisations and includes workers from both the private and public sectors.

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We also found a contrasting economic feeling between the two countries, with an atmosphere of pessimism in Australia compared with New Zealand’s more positive disposition.

In many ways, this is a result of the language of doom and gloom in Australia in contrast with talk of New Zealand’s ‘rock-star’ economy and yet despite the different rhetoric, the performance of the two economies is broadly similar.

The Pulse found sentiment around job security was comparable in Australia and New Zealand, with 25 per cent of Australian workers feeling secure in their role compared with 28 per cent of New Zealanders.

In Australia, 40 per cent of workers are expecting further cost cutting and redundancies in the next six months, compared with 37 per cent in New Zealand.

This suggests political commentators and policy makers need to promote a balanced perspective of the performance of both economies. At the same time, guidance is required to build people’s awareness of emerging areas of jobs growth and ability to plan job transitions.

Innovation will be one of the key drivers of the next upswing in productivity. In Australia there was a clear relationship between workers’ productivity and the level of potential returns that could result from innovations being implemented. In New Zealand this relationship is less evident. On that side of the ditch, innovation would benefit the productivity of workers equally.  

Increased absorption of technology change will produce significant gains in productivity improvements. However, without investing, training and shifting workplace behaviour to encourage early adoption, many Australian and New Zealand organisations will fail to take advantage of the next wave of IT driven productivity.

We know the days of a ‘job for life’ are gone, with workers understanding they need to adapt and reskill continually to remain employable in a rapidly changing labour market.

The Pulse findings highlight the role for governments and employers in communicating where they see the jobs of the future, identify at-risk jobs and support people to make a timely skills transition.

If this isn’t addressed, there is a risk of continuing generations of older workers who find themselves redundant. Currently, Australia has low rates of participation from age 55. Unless the growing issue of skills transition (particularly for older workers) is addressed, this problem will get more acute.

Focusing on developing a fully-equipped, skilled, capable and contributing older population is critical to ensure the productivity gains the economy needs occur. Otherwise, there is likely to be an increasing divide between skilled older workers who continue past the retirement age and unskilled older workers claiming the aged pension.

Preparing the workforces of Australia and New Zealand to make productivity improvements throughout their entire career will create the talent pool needed to adapt to the changing labour market and lift productivity.  

Bill Farrell is an Advisory Regional Managing Partner at EY.

The views expressed in this article are the views of the author, not of Ernst & Young or ANZ.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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