INTHEBLACK April 2022 - Magazine - Page 38
F E AT U R E
// B O O S T I N G P R O D U C T I V I T Y
AVERAGE GROWTH RATES
% growth
8
7.0
PAST 40 YEARS
6
4
2
0
PAST 40 YEARS
3.0
1.6
1.5
Real GDP per
person
1.8
2.5
3.3
5.0
2.3
1.3
Real GNI per
person
Real GDP
Real GNI
Nominal GDP
Sources: ABS Australian National Accounts: National income, expenditure, and treasury
Fabrizio Carmignani, professor of economics at
Griffith University in Queensland, says that, while
population growth trends are important, we shouldn’t
overestimate their relevance for the Australian economy.
“Population growth is known to be a possible
driver of aggregate economic growth, but what we are
interested in is the growth of GDP per capita, because
it’s GDP that is correlated with wellbeing and human
development,” he says.
“Population growth does not necessarily have a
positive relationship statistically with the growth
of GDP per capita, so I personally don’t want to
overestimate its role.”
BOOSTING PARTICIPATION
There are similar trends at play with workplace
participation, which has increased over the past 40 years
to reach record high levels of 66.3 per cent in March
2021. However, the report reveals that the participation
rate is expected to decline to 63.6 per cent by 20602061, “as the proportion of older Australians in the
population increases”.
Hunter, however, argues there are many levers that
the government and the private sector can pull to
ensure greater workforce participation over the coming
decades, including removing barriers for women to
return to work, flexible workplace arrangements, and
incorporating new technologies.
A key strategy is helping older people stay in
employment longer, including shift work, remote
work and job sharing.
“There are businesses with quite large labour forces
who are a bit older, where they’re able to efficiently
and effectively make it work,” Hunter says.
“If you can place these employees in a role that means
they can be productive, or that they can job share
effectively, then the business wins, too.”
Carmignani says participation should be encouraged
through active labour market policies that help both
the unemployed and the underemployed. “We need to
38 ITB April 2022
ensure, for instance, that there is workplace flexibility
for female workers to participate more in the labour
force,” he says. He also advocates for greater investment
in job-matching programs that connect people to
opportunities in other sectors, as well as re-skilling
courses.
“Re-skilling is not just the role of government, but it’s
vital for the private sector as well,” he says. “Companies
gain a lot from re-skilling a new employee, as it becomes
an investment rather than a cost.”
Carmignani also views participation through the
same lens as population data – illuminating, but not the
lynchpin that will make or break economic growth over
the next four decades.
THE PRODUCTIVITY MANTRA
What does have the potential to make or break
economic growth, however, is productivity – the level
of technological innovation, progress, wage growth and
healthy levels of competition that accelerate growth.
Unfortunately, as Hunter points out, the past decade
has witnessed disappointing productivity rates both in
Australia and overseas, with labour productivity gains
slowing since about 2005 and averaging 1.2 per cent
annually in Australia, as compared to the historical
average of 1.5 per cent.
“It’s not that we haven’t had technological advances,
but the rate that they’ve come through at and the
impact they’ve had in terms of output have not been
as fast as before,” Hunter says.
“It’s been said that technology improvements are
increasingly improving our leisure life, such as the
Netflix model, but perhaps having less of a tangible
impact on our business life.”
Post-pandemic, Hunter cautions against Australia
maintaining a “fortress mentality” in its business
dealings, as this could have a detrimental impact
on productivity.
“From a GDP perspective, we need to interact
with the rest of the world, as learning from how