Labour productivity growth sustained since 1978

Labour productivity growth sustained since 1978

Updated productivity measures, which provide fresh insight on New Zealand's economic performance from 1978, have been released by Statistics New Zealand today. Labour productivity – that is, output per unit of labour input – grew on average by 2.2 percent annually in the measured sector from 1978 to 2006. The growth in labour productivity was driven by average annual output growth of 2.6 percent, combined with relatively weak labour input growth (averaging 0.4 percent annually).

The strongest period of labour productivity growth was from 1997 to 2000, where solid output growth and declining labour input boosted productivity by 3.5 percent annually. From 2000 onwards, labour productivity growth has averaged 1.4 percent annually, compared with the 28-year average of 2.2 percent.

Average annual capital productivity decreased by 0.6 percent from 1978 to 2006, due to average annual capital input growth of 3.3 percent outstripping output growth. Capital productivity declined by 4.0 percent on an average annual basis from 1985 to 1990, driven by strong capital input growth. This period coincided with the tail-end of the 'Think Big' projects, which resulted in significant capital and infrastructural investment. From 2000 onwards, capital productivity has fallen 0.1 percent on an average annual basis.

Multifactor productivity growth averaged 1.1 percent annually from 1978 to 2006. Since 2000, annual growth has been below this average, at 0.7 percent. Multifactor productivity is the growth in output that cannot be attributed to either labour or capital. It generally results from technological change or improvements in knowledge, methods and processes.

Coverage of the productivity measures is restricted to a subset of the economy referred to as the ‘measured sector’. The measured sector excludes the following industries: government administration and defence, health, education, property and business services, and personal and other community services.

Geoff Bascand

Government Statistician

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There is a companion Hot Off The Press information release published – Productivity Statistics: 1978–2006.

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