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What do we talk about when we talk about productivity?
Watching the Black Caps play last night, and indeed the whole World Cup so far has been a revelation. Like many New Zealanders, I’ve found a previously unsuspected interest in, and affection for, cricket. I’ve seen a lot of comment about how productivity dipped yesterday and would have still been pretty low this morning. But does that really matter in the big scheme of things? Is New Zealand’s GDP going to go down the gurgler because of a sports match?
When I tell people that I work at the Productivity Commission, a lot of the time it conjures up visions of clipboards and stopwatches, a government agency telling people to work faster and harder, and more profits for bosses. Maybe in another era that would have been the focus. Productivity is important, but the goal of increasing productivity isn’t just to grow GDP per capita. The bigger picture is wellbeing.
Of course, that’s a pretty nebulous term, but New Zealand knows quite a lot about wellbeing already. We have beautiful landscapes, pretty good weather, and the Kiwi lifestyle is legendary. It’s one of our major selling points for attracting skilled immigrants, and is a key factor in luring homesick expats back to raise their kids.
Everyone has their own ideas about what wellbeing means to them, and it’s a combination of many factors. It might be being able to afford your own house, having a fulfilling and rewarding job, being healthy, living in a clean environment, and feeling connected to the community. The OECD is thinking about how to find out what is important to people, for example their Better Life Index attempting to map wellbeing around the world.
But how does productivity help us get there? At the very basic level, productivity is about working smarter not harder, on all levels. When we measure productivity, we look at labour productivity as well as multi-factor productivity. Labour productivity means how much is produced per hour worked. Multi-factor productivity translates as “everything else”, and measures the impact of other things like innovation, management and skills, but also that indefinable human factor.
In New Zealand, creativity and innovation are part of our national identity. From Sir Ernest Rutherford to Sir Peter Jackson, Katherine Mansfield to Brendon McCullum, we celebrate people who do things differently from how they have been done before. What I see in this is the universal human urge to improve how we work. Maybe in your job you look around and see things that could be done better. And that applies whether you are working in a factory, running a small business, processing building consents in local government, or providing social services. Sometimes things get in the way, eg. bad management, lack of resources or poor regulations, but I think the overriding impulse is to lift our game.
And that’s the key to productivity – it means getting more done for less effort, making businesses more profitable but also making houses more affordable and social services easier to use. All of these things lift our wellbeing overall.
New Zealand’s productivity has been pretty low in recent decades, and here at the Productivity Commission we’re working on how to lift that through our inquiries and research. But it’s not all a one-way relationship. Happy people are more productive – and for that we can thank McCullum, Elliott and the rest of the team for doing their bit for national wellbeing.
- Catherine Jeffcoat, Communications Advisor
Disclaimer: Blog posts are written by staff members and do not represent the official views of the Productivity Commission.