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New Zealand's productivity performance and prospects

Aaron Drew

New Zealand's medium-to-longer-run growth prospects and general standard of living critically depend upon its labour productivity performance. Relative to most OECD countries, the level of labour productivity in New Zealand is low and, when measured as GDP per worker, the historic growth performance has also been relatively poor. The apparently poor performance is a key concern for policymakers and has attracted much research attention. The focus has been to understand why performance has not been better, given that cross-country indicators of New Zealand's economic environment broadly suggest New Zealand should be amongst the highest performers, not a laggard. In this article, the research is synthesised and recent official productivity data released by Statistics New Zealand (SNZ) is analysed. A key conclusion is that the historic productivity performance has in fact been significantly better than is suggested by looking at the aggregate measures of productivity in isolation, and there is some cause for optimism that this will continue.