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Poor productivity no surprise, but how are we addressing it?

The EMA is not surprised at the results of the Productivity Commission research that highlights the cost of the country’s poor productivity performance.

Chief executive Brett O’Riley says that New Zealand’s labour productivity growth has underperformed for decades is not new, and reiterates that the government must make addressing it a priority.

"We didn’t see this in last month’s first Wellbeing Budget but it is essential to achieving the economic prosperity needed to provide the funding to deal with the difficult and complex social issues the government is tackling," he says.

However, the $300m of expansion capital for start-ups in the budget is a significant step in recognising that access to capital is crucial to businesses being able to invest in technology and processes that can increase productivity. The EMA is working with the government in this area, particularly around manufacturing and for exporters.

"Our hope is that the 2020 Budget focuses more on driving better productivity, higher wages and further growth in the economy, and the Productivity Commission report also highlights the urgent need to address this."

Mr O’Riley says rather than looking at how poorly New Zealand’s productivity performance is compared to other OECD countries, we should be looking at who is performing best and using them as an example.

Businesses need access to capital that will enable them to modernise their plants and systems, and Government-led programmes and incentives are crucial. Initiatives such as the Provincial Growth Fund are excellent, but there need to be more because it is not making an overall material difference.

Another barrier to better productivity for EMA members and other businesses across the country is increasing amounts of legislation and the cost of compliance with it.

A recent EMA-commissioned NZIER report estimated the cost of this at $5b (based on last recorded figures from 2012), or 2.5 per cent of Gross Domestic Product (GDP), resulting in lower productivity, lost opportunities and burn-out.

"In the future people will be doing different jobs in different ways so we must all move on and embrace the modern workplace and patterns of work. At a bare minimum let’s make it easier for business to be more productive, because in many cases their survival depends on it," says Mr O’Riley.

The EMA welcomes the opportunity to continue to be part of the government’s planning to improve productivity in New Zealand for the benefit of all.


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