From February issue, NZ Manufacturer
– A view by John Luxton
Productivity has long been a buzzword in political and economic discussions in New Zealand, often presented as a simple solution to complex problems. However, I am deeply unimpressed with people who rattle off the word “productivity” with no more thought behind what it actually means than “woke”.
I believe it’s crucial to understand that productivity encompasses far more than what surface-level conversations suggest. Simplistic, bumper-sticker answers do not suffice when it comes to a topic as nuanced and multifaceted as productivity.
Understanding Productivity – Productivity, in essence, is about maximising outputs while minimising inputs. It’s a measure of how efficiently resources like labour, capital, and technology are used to generate goods and services.
A look at the world’s most productive countries – Switzerland, Luxembourg, Germany, Singapore, Netherlands, Norway, Denmark, Sweden and Hong Kong reveals a variety of approaches to achieving high productivity levels. The USA is in that mix, but with the size and scale of their economy, there is less for us to learn from their example.
Myths and Realities – Common rhetoric blames unproductive workers, excessive taxation, and bureaucratic inefficiencies for low productivity levels. However, a closer look at the top productive countries shows a different story. These nations excel in areas like macroeconomic stability, resource utilisation, open trade, and advanced economic structures.
Key Factors Driving Productivity – Several factors are critical to driving productivity in a national economy:
- Macroeconomic Stability – Low inflation and realistic interest rates create a stable environment for business planning.
- Natural Resources – Efficiently utilised resources significantly contribute to productivity.
- Open Trade – Free trade enhances productivity through diverse product/service offerings.
- Economic Structure – Moving away from agriculture toward a more diverse economy.
- Access to Capital – Essential for business growth and innovation.
- Regulatory Environment – Balancing flexibility with social and environmental responsibilities.
- Technology and Education – Investing in technology and education is crucial for improving efficiency and skill development.
New Zealand’s Position In New Zealand we love to complain about geographical isolation, our relative size in the global market, unmotivated and feckless employees, over-regulation and the challenges of shipping products long distances, but there’s more to New Zealand’s productivity puzzle. Issues we must confront include –
- Health System – A once exemplary system now struggles with inequities and access issues.
- Infrastructure – There’s a noticeable reluctance to invest in future-proofing our infrastructure.
- Labour – The fixation on keeping wages low for competitiveness often undermines worker well-being.
- Natural Resources – Our over-reliance on low-value products like milk powder needs re-evaluation.
- Education & Skills Development – While we perform well in some areas, there are significant disparities in service quality.
A Look at Northern Europe Northern European countries, often lauded for their high productivity, offer valuable lessons. These nations boast progressive labour policies, robust social welfare systems, advanced health care, and governments that actively support innovation and development. They balance economic growth with social justice and the dignity of their citizens.
New Zealand’s Lost Egalitarianism In the past, New Zealand was a leader in human rights and quality of life improvements. However, we’ve seen a shift toward individualism, with the property market becoming a focal point of selfishness, overshadowing investment in productive sectors.
This mindset shift has moved us away from the collective welfare ethos that once defined us and nurtured the notion that the economy exists to serve the people, not the other way round.
The Path Forward To enhance productivity, New Zealand needs to revisit its roots and draw lessons from successful countries. This involves not just focusing on economic metrics but also embracing social welfare, equity across population groups and inclusive growth.
Subsidised public transport, affordable healthcare, and investment in environmental sustainability are just as important as fiscal policies.
Conclusion The journey to higher productivity is not just about economic growth; it’s about integrating social justice and the well-being of all citizens into our economic model.
As we stand at this crossroads, it’s time for New Zealand to embrace a broader, more comprehensive approach to productivity – one that looks beyond simplistic narratives and addresses the multifaceted nature of this critical economic measure. Only then can we hope to achieve the kind of productive, equitable society we aspire to be.
I say this in full recognition that what I am talking about seems to be the exact opposite of where we are heading, politically and socially. It may be unfashionable to say, but the failure of social cohesion, the rejection of a belief in a shared future and politicians fuelling division can only hurt our future success.
Personally, I’m a dedicated atheist, but when we think about where we should head and what we should be as a nation, we could do worse than ask ourselves – “what would Jesus do”?