18 October 2007

Productivity Statistics Provide a Wake-Up Call

The long-term trend productivity statistics released today show that significant improvement is needed if New Zealand is to achieve the required levels of economic growth to move New Zealand up the OECD growth ladder.

“The figures show that labour productivity growth has averaged only 1.4% annually since 2000 compared with the 28-year average of 2.2%,” said Chamber CEO Charles Finny.

“These figures are too low and there is no evidence things are improving. The achievement of higher productivity is essential if we are going to grow the economy to its maximum potential. Productivity growth is also important for both businesses and employees.

“Higher productivity will contribute directly to higher wages. In this regard, yesterday’s push by the CTU for a significant rise in the minimum wage is not the way forward. Just as wage rises should reflect productivity growth, so too should the rise in the minimum wage.

“A high wage economy is in New Zealand’s interests but raising the minimum wage is not the way to achieve this. Policies that focus on increasing productivity, improving skills and enhancing the business environment are far more effective ways to raise the overall level of wages in New Zealand.

“Increased investment is a key to increasing productivity, particularly in the areas of infrastructure and technology. Business will be in a position to provide much of that investment but it needs government to provide a sound policy platform to allow this to happen. Further tax cuts are essential in this regard,” Mr Finny concluded.

ENDS

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