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Can Australia be a productivity leader?

PC productivity insights

This productivity insights research was released on 13 March 2020. It presents Australia’s relative levels of productivity and income compared with other advanced economies.

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  • Key points
  • Contents
  • Supporting data
  • Australia is a high income country, with the 12th highest average income in the Organisation for Economic Co-operation and Development (OECD).
    • This is partly due to Australians working harder, with the 5th highest hours worked per capita in the OECD. This is driven by high labour force participation rates and hours worked per employee relative to our OECD peers, which in part reflects an absence of recession for 28 consecutive years.
    • When it comes to working smarter — measured by our labour productivity level or GDP per hour worked — Australia’s productivity is middling, sitting at 16th among the OECD.
  • The United States effectively represents the productivity frontier — a large diversified economy with high underlying productivity. It currently takes a typical Australian worker five days to produce what would take their American counterpart four days.
  • Catch-up to the productivity level of the United States has proven elusive over the past five decades, partly because our relative remoteness and low population density have been a barrier to achieving efficient scale in manufacturing and goods distribution.
  • Australia’s remoteness and low population density will continue to limit convergence in manufacturing and goods distribution, but there are substantial opportunities to improve performance in Australia’s service industries.
    • Estimates suggest the Australian service industries are between 20 per cent and 60 per cent less productive than the same industries in the United States.
  • Australian formal educational attainment is rapidly approaching United States levels. And while the Australian economy is less research and development (R&D) intensive, this largely reflects the different industries in which Australia’s comparative advantage lies — more in mining and agriculture, and less in manufacturing.
  • Management capability is critical in facilitating innovation but Australian businesses tend to perform poorly in this area, particularly in harnessing the benefits of digital technologies.

Media requests

Simon Kinsmore – 0455 949 554 / 02 6240 3330 /

  • Preliminaries: Cover, Copyright and publication detail, Foreword, Contents, and Abbreviations and explanations
  • Key points
  • Introduction
  • Chapter 1 Australia’s living standards compare well, partly due to high labour utilisation
  • Chapter 2 Can Australia catch up to the US?
  • Chapter 3 Summing up
  • References

The following excel file contains tables of data used to make the charts within this report.

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