Kiwi productivity lags behind
Despite the longer hours New Zealanders are working, their counterparts overseas are still earning more, a report has found.
The Productivity Commission's report "Productivity by the Numbers" highlights a growing gap between New Zealand and other countries in the Organisation for Co-operation and Development.
Kiwis work 15 per cent more hours a year than the OECD average, but despite the longer hours produce 20 per cent less economic activity per hour.
The report said productivity growth had stalled since the year 2000, and the gap between New Zealand and its peers - including Australia - was widening.
The report said New Zealand's productivity growth rates - which determine how quickly countries move up and down the ladder - were in the bottom third of the OECD, sitting alongside Slovenia and the Slovak Republic.
It said our lower economic base, combined with low productivity growth rates, was a matter for some alarm: "This is highly unusual internationally and raises serious concerns."
The lower productivity growth could be due to New Zealand being slower in adopting new techniques and practices, the report said.
New Zealand Initiative research fellow Jason Krupp said the report delivered unsurprising news but finding a solution was not simple.
"The thing to come out of the report is productivity is not related to how much work we put in. We're not bludgers by any measure, but what it shows is that there's a lack of investment in our businesses," he said.
Krupp said several industries were singled out by the report as being productivity laggards.
"The typical timber mill in New Zealand uses second-hand technology from Australia.
"Australia have replaced it, and is it any wonder we're less productive in forestry?"
The release of the report attracted criticism of the government's economic management from opposition parties.
Labour deputy leader and finance spokesman David Parker said it was ominous the report noted there was no sign the gap between New Zealand and its OECD counterparts was closing.
"The sad thing about this is the report says there's no sign of us catching up. Unless we do something the future for New Zealand is low wages," he said.
Parker said low wages would exacerbate the productivity problem as ambitious and talented young people, who could help improve the economy, would leave the country to seek work in better-paying markets.
Green Party co-leader Russel Norman blamed the stalling of productivity growth on a lack of focus on innovation.
He said New Zealand spent half the OECD average on research and development.
"The National Government are repeating the mistakes of previous governments by failing to reverse the decline in productivity by investing more in research and development," he said.
A spokeswoman for finance minister Bill English called the report a "useful contribution for getting to the bottom of New Zealand's productivity puzzle".
English said lifting productivity was not a matter of working longer hours and a package of more than 300 initiatives had been launched to make the economy more productive and competitive.
"There is no silver bullet," he said.
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