National low productivity could be solved through greater tech investment, report says

Thursday, 22 March 2018

Forget about robots stealing your job. The Productivity Commission says what the country really needs to boost wages is more investment in technology.

A new report says, historically, industries with low technological investment are less productive and workers in those fields are paid less.

The latest Statistics New Zealand figures show that labour productivity in New Zealand continues to lag behind that in Australia.

The Commission's economics and research director Paul Conway said productivity and wages were linked and if the former went up, the latter followed.

'The hours worked per capita are the highest in the OECD but the value produced from the New Zealand labour force is the lowest. Our wages are lower than other OECD countries again because our productivity is lower,' Conway said.

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'Technology is a key driver of productivity. Technology is a double-edged sword, it lifts productivity on the one hand but there are issues around who benefits from that on the other hand and people worried about losing their jobs.

'But that's a good problem to have.'

The latest Statistics New Zealand figures show that labour productivity in New Zealand continues to lag behind that in Australia. From 1996 to 2017, the annual average growth in labour productivity was 1.5 per cent a year in New Zealand but 2.2 per cent in Australia.

Data on 16 industries from 1996 to 2016 showed a fall in the labour income share from about 57 per cent to 55.6 per cent of national income.

The report said workers in industries with higher technological investment such as telecommunications had a higher average income than those less technologically advanced, such as accommodation and hospitality.

Employment and Manufacturers Association chief executive Kim Campbell said New Zealand businesses needed to become more capital intensive and the lack of technology in many sectors was 'abysmal'.

'We're in the dark ages and need to increase science and technology investment,' Campbell said.

Conway said the country was not linked well internationally and could do more to open channels for information and knowledge sharing.

'Knowledge-based asset is the new oil and we haven't grabbed it and made the most of it,' he said.