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peak to any economist about Australia's productivity challenge and it won’t be long before you hear famed Nobel laureate Paul Krugman’s aphorism, “Productivity isn’t everything, but in the long run, it’s almost everything.” The observation holds sway because, as Krugman explained, a country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker. Yet, in the three decades since his proclamation, productivity growth in most advanced economies around the world — Australia included — has been sluggish compared to historical levels. Sparking particular concern in Australian economic circles is that, unlike most other advanced economies, after a brief post-pandemic pop, Australian productivity has not only slowed, it’s gone backwards. Reflecting the slump, the government has lowered the productivity assumptions underlying its economic forecasts, with the flow-on implication that in 40 years, Australians’ income will, on average, be almost 20 per cent less. “Productivity is at a 60-year low,” says Melissa Wilson, senior economist at the Committee for Economic Development of Australia (CEDA). “Knowing how important it is for living standards and long-term prosperity for Australians, it’s absolutely critical that we do turn it around.” The big question, then, is how? For the answers, read the full story in Company Director magazine.  Comments are closed.
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