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Labour productivity up 3.7% in March 2010 year

Wednesday 16th March 2011

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Labour productivity rose 3.7% in the year to March 2010, as workforce hours fell much more rapidly than output.

Publishing the data today Statistics New Zealand (SNZ) cautioned that it was preferable to estimate productivity across growth cycles, as productivity growth within an incomplete cycle could be biased.

In the latest, incomplete, cycle from 2006 to 2010, the annual average growth rate for labour productivity so far was 0.9 percent.

That was lower than in any previous cycle, with the average annual increase between 1978 and 2010 being 2%, SNZ said.

Productivity growth was an important contributing factor to a nation's long term material standard of living.

SNZ's productivity figures measure about 80% of the economy. Sectors excluded include government administration and defence, health, education, and ownership of owner-occupied dwellings.

The 3.7% rise in labour productivity in the year to March 2010 was due to a 4.3% fall in labour input, while output fell 0.8%.

The fall in labour input in the latest year was driven by declining employee hours in manufacturing and construction, as well as a substantial and widespread fall in self-employed hours, SNZ said.

The fall had resulted in more capital available per worker, known as capital deepening, which contributed 2.1% to labour productivity growth. Multifactor productivity - the ratio of output to total inputs - contributed 1.5%.

Capital productivity fell 1% in the March 2010 year, as capital inputs rose 0.2% and output fell 0.8%. A 2.3% fall in average annual capital productivity from 2006 to 2010 resulted from a 2.4% rise in average annual capital input and a 0.1% rise in annual output.

For the entire series from 1978 to 2010 capital productivity fell 0.6% on an average annual basis, with annual capital input growth up 3% and annual output up 2.4%.

Multifactor productivity rose 1.5% in the March year, with total inputs down 2.3% and output down 0.8%.

It was the first year since 1992 in which both output and total inputs had fallen, SNZ said.

Multifactor productivity increased at an average of 1% a year during the 32 years of the series. For 2006 to 2010 the average fall was 0.5% annually.



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