New figures confirm labour productivity growth has bounced back over the past couple of years.
The figures were in the annual national accounts from the Australian Bureau of Statistics on Friday.
They showed gross valued added – that’s a measure of output in real terms – per hour worked rose by 2.1 per cent in 2012/13 compared with 2011/12.
That was an exact repeat of the rise in this broad measure of labour productivity between 2010/11 and 2011/12.
In the 32 years leading up to 2010/11 – as far back as the economywide figures go – the average yearly increase was 1.6 per cent.
So in the past two years, labour productivity growth was nearly one and half times above normal.
The pickup in the latest two years was a bounce back from a period of slower productivity growth, an average of 1.2 per cent for the decade from 2000/01 to to 2010/11.
There are a few reasons for that earlier slowdown.
One was a big rise in capacity in the mining and electricity distribution sectors without an immediate lift in output.
Another was the suppression of growth in non-mining sectors by the high exchange rate and the fallout from the global crisis.
Slow productivity growth typically comes hand in hand with slow output growth.
It’s always important to work at lifting productivity.
But these figures confirm that Australia has not succumbed to an unexplained bout of reform fatigue, complacency, laziness or some other moral failure.
Even so, the doomsayers will find something in these figures to stoke their anxiety.
Multifactor productivity (MFP), the productivity of capital – like machinery – and labour combined fell by 0.5 per cent in 2012/13, despite the solid gain in labour productivity.
Compared with a decade ago, MFP is down by two per cent, even though labour productivity rose 18 per cent.
The reason is the productivity of capital fell by 24 per cent over the decade and nearly four per cent last year.
But not too much ought to be made of that.
For a start, the idea that Australia has become 24 per cent less clever at using productive capital is just plain implausible.
It implies Australia’s annual gross domestic product would have to rise by about $570 billion just to get capital productivity back up to where it was a decade ago.
And here’s another way of looking at it.
Your laptop PC may have the processing power needed to run NASA’s Apollo space program many times over.
But that doesn’t imply your use of capital equipment is inefficient, not in any meaningful way.
It just means your laptop has a lot of features you don’t really need.
Even ignoring the long list of statistical sleights-of-hand and theoretical fudges used to apportion the contributions of capital and labour to GDP, that alone is a good enough reason to take the MFP estimates with a large grain of salt.
