More effort needed to kickstart productivity growth: ACCI
7 Jun 2023|
Today’s National Accounts data has revealed that the Australian economy risks being dragged down by lacklustre productivity growth, the nation’s largest business network has warned.
Sluggish GDP numbers show that the economy expanded by just 0.2 per cent in the March quarter.
“These are worrying figures when we have a terms of trade boom – our economic situation really should be steady solid growth, but instead we have anaemic growth and in fact going backwards on a per capita basis,” ACCI chief of policy and advocacy David Alexander said.
“One of the key data points of concern is the further slowdown in productivity, which must become a key focus for government policymakers.
“The slide in labour productivity has continued with GDP per hour worked falling a further 0.3 per cent in the March quarter, with an overall decline of 4.6 per cent recorded for the year.
“At the same time, compensation of employees is up 10.8 per cent in the last 12 months, a rate that cannot possibly be sustained without a corresponding increase in labour productivity.
“The Reserve Bank has pointed out that without productivity increases, wage increases feed higher inflation, which then forces them to raise interest rates.
“The Productivity Commission has pointed to the centrality of flexibility as a key part of productivity, but worryingly we see the government making the system more inflexible through multi-employer bargaining and “Same Job, Same Pay” changes.
“Business urges the government to rethink its centralising approach to workplace arrangements and allow the more flexible, dynamic approach necessary for a modern economy.”