Media release: NZ Initiative welcomes Productivity Commission report
Wellington (5 February 2015): The New Zealand Initiative welcomed today’s Productivity Commission report highlighting the importance of productivity growth.
The report, “Who benefits from productivity growth? The labour income share in New Zealand”, shows that real wage growth is highest when labour productivity growth is highest.
The New Zealand Initiative’s Head of Research, Dr Eric Crampton noted, “In the long term, the only thing that can sustainably improve wages is productivity growth.”
“The report also shows how low productivity growth in the services sector, along with high housing costs, have eaten into workers’ wage gains.”
Dr Crampton noted that while the headline figures point to labour’s income share having declined over the past thirty years, real wages are up substantially.
“Because of capital investment and productivity improvements over the past several decades, workers get a slightly smaller fraction of a much larger national income. While labour’s share of total output dropped by about seven percentage points, total output doubled over the period.”
“More worryingly, recent growth has come not from productivity improvement but rather from adding more workers and more machines. Sustainable long-term real growth requires improving productivity.”
The report can be viewed here.
Dr Crampton is available for comment.
ENDS
About the New Zealand Initiative
The New Zealand Initiative is an evidence-based think tank and research institute, which is supported by a membership organisation that counts some of the country’s leading visionaries, business leaders and political thinkers among its ranks.
Our members are committed to developing policies to make New Zealand a better country for all its citizens. We believe all New Zealanders deserve a world-class education system, affordable housing, a healthy environment, sound public finances and a stable currency.
The New Zealand Initiative pursues this goal by participating in public life, and making a contribution to public discussions.
For more information, visit www.nzinitiative.org.nz