Productivity problem? Start at the bottom, not the top

Look to Australia's largest businesses rather than government when it comes to productivity.

Since 2002, Quinn showed, the most productive Australian firms (the top 5 per cent) had not kept pace with the most productive firms globally. In fact, Australia’s ‘productivity frontier’ has slipped back by about one-third. The best of ‘Made in Australia’ hasn’t kept pace with the best of ‘Made in Germany’, ‘Made in the Netherlands’ or even ‘Made in America’.”

And then there’s the other 95 per cent. In the past two decades, their output per hour worked has barely risen. So 19 out of 20 Australian firms don’t produce much more per hour than they did when Sydney hosted the Olympics.

A Productivity Commission study has found that half the slowdown in productivity improvement in the market economy in recent years is accounted for by manufacturing. A separate survey of management practices in manufacturing firms found that Australia’s managers rank below those in Canada, Sweden, Japan, Germany and the US.

The drop we’ve experienced is “not the fault of employees: there are simply fewer good opportunities available. According to Treasury’s analysis, much of the drop in job-switching is because workers are less likely to transition from mature firms to young firms. With fewer start-up firms, it stands to reason that there are fewer start-up jobs.”

Productivity problem? Start at the bottom, not the top

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