New Statistics Show Improvement in Productivity

Productivity Statistics: 1988–2005

28 March 2006

New Statistics Show Improvement in Productivity

Statistics New Zealand has today released new official productivity measures, which show that labour productivity increased on average by 2.6 percent annually over the period 1988 to 2005.

Increases in labour productivity – that is, increases in output per unit of labour input – are often cited as a goal if New Zealand is to increase real incomes and support other gains in well-being.

These new statistics on New Zealand's labour and multifactor productivity, along with capital productivity and associated series, throw fresh light on the debates surrounding New Zealand's economic growth since 1988. The contribution to growth that is unaccounted for by changes in both labour and capital inputs, comprising such factors as technological change, and generalised improvements in knowledge, methods and processes, is known as multifactor productivity.

The new series show that, post-1993 in particular, both labour productivity and multifactor productivity growth rates were higher than in previously published unofficial estimates. They suggest that the annual labour productivity growth rate in New Zealand (2.4 percent per annum) has marginally exceeded Australia's over the post-1993 period. Growth in gross domestic product (GDP) for the measured sector in New Zealand has been strong since 1993, averaging 4.1 percent per year. Additional labour inputs contributed 0.9 percent annually to this economic growth. Capital inputs, such as land, buildings, machinery and computer software, contributed 1.1 percent annually. The remainder of the economic growth, 2.0 percent per year, is due to multifactor productivity growth.

The coverage of the productivity measures is restricted to a subset of the economy referred to as the 'measured sector', which excludes non-market industries (such as government administration and defence), as well as education, health, personal and other services, and property and business services. Productivity for these industries is typically hard to measure, and their inclusion would bias the resulting series.

While these results show solid productivity growth, other statistics published by the Organisation for Economic Co-operation and Development (OECD) suggest that despite improved performance New Zealand's level of productivity is still below that of many other developed countries, including Australia. For example, in 2004, based on published OECD statistics, the level of GDP per hour worked in Australia is estimated to have been approximately 31 percent higher than in New Zealand.

These official productivity statistics use information from existing Statistics New Zealand and other sources. The statistics have therefore been produced with no increase in the reporting burden of New Zealand businesses or individuals.

Brian Pink
Government Statistician

ENDS

There is a companion Hot Off The Press information release published – Productivity Statistics: 1988–2005.

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