October 2016
www.nzmanufacturer.co.nz News 6 Business XPO does it
10 Manufacturing Technology
again!
New Zealand’s Productivity Problem Dieter Adam, Chief Executive, New Zealand Manufacturers and Exporters Association
Brigid van Wanrooy
A set of simple
management practices can help manufacturing companies outperform. International research is mounting on the case for a group of management tools – known as high performance work practices – for improving business performance. And the evidence is particularly compelling in manufacturing. We are not talking about millions of dollars of investment in R&D or capital. We are talking about a set of human resource practices that are focused on: 1. improving employees’ knowledge, skills and abilities 2. motivating employees to perform, and 3. providing employees with the opportunity to contribute to how their work is done. It presents quite a paradox: manufacturing businesses, on the whole, are not implementing a set of practices that will boost performance.
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In recent decades, New Zealand has been lagging behind many OECD countries in productivity. New Zealanders continue to work longer hours than many other OECD countries, but our productivity (output per hour worked) remains lower in comparison. Correcting this problem and accelerating productivity growth across our economy is a key part of creating a wealthier country and helping to improve living standards for everyone.
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There is a link between labour productivity and wages – our failure to improve productivity has contributed to our poor progress in closing the income gaps between New Zealand and many of our trading partners that have higher per capita incomes – Australia is the often cited example. In 2013 the Productivity Commission issued a report discussing New Zealand’s productivity – all the following data points come from that report, which is worth checking out. The above shows New Zealand’s performance compared to a section of OECD countries. You can see we still work longer hours than the selection, but our GDP per capita and GDP per hour worked is significantly lower, and the trend is moving in the wrong direction.
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