Bulletin 2023

PC productivity insights

This bulletin was released on 10 July 2023. The Bulletin unpacks the latest Australian Bureau of Statistics (ABS) productivity statistics and examines trends and new developments underlying Australia's productivity performance.

The key message is that the 2021-22 improvements in productivity will decrease as the distortionary impacts of the COVID-19 pandemic unwind.

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Data released in June 2023 showed that labour productivity decreased by 4.6% in the 12 months to March 2023. This is most likely due to the unwinding of COVID-19 restrictions and the historically low unemployment rate.
- Labour productivity rose during the pandemic as labour shifted to more productive industries, and that appears to be unwinding in 2022-23 with labour productivity falling.
- Productivity rose in 2021-22. Labour productivity and multifactor productivity (MFP) in the market sector increased by 1.5% and 2.2% respectively. High MFP growth drove increased output in the market sector.
Growth in labour productivity and MFP varied greatly across industries in 2021-22.
- Labour productivity growth ranged from -5.0% to 13.7% across industries; 12 of the 16 market industries reported an increase in labour productivity.
- MFP growth ranged from -2.8% to 21.2% across industries; 13 of the 16 market industries reported an increase in MFP.
- The agricultural, forestry and fishing sector demonstrated the largest growth in productivity, while the mining sector struggled with the largest decline in productivity.
This bulletin provides insights into the 2021-22 productivity story.
- The apparent productivity boom in the agricultural, forestry and fishing sector was driven by weather conditions, and not from increased technology or efficiency.
- Strong growth in commodity prices have led to an uptick in mining investment; this may reverse the weak real output and productivity growth in the mining sector.
- Falling labour productivity growth may be driven by a stagnation in non-mining investment.

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Media team – 02 6240 3330 / media@pc.gov.au

Annual productivity bulletin examines recent productivity trends

The Productivity Commission’s 2023 Bulletin unpacks the 4.6% decline in labour productivity for the 12 months to March 2023, and finds that the decline could be driven in part by the unwinding of COVID-19 related effects, as well as the historically low unemployment rate.

“The COVID-19 pandemic led to a temporary increase in measured labour productivity. With the service sector affected by restrictions, many less productive firms paused operations and higher productivity sectors accounted for a larger share of hours worked in the economy,” said Productivity Commission Chair Michael Brennan.

The Bulletin finds that productivity growth increased across most industries in 2021-22. In agriculture productivity rose due to favourable weather conditions. Growth in other industries, such as transport, postal and warehousing, and information, media and telecommunication may partly reflect the enduring impact of technology adoption.

Citing the recent 5-year Productivity Inquiry, Mr Brennan said that the increased digital capacity Australia developed during COVID-19 could lead to a lasting productivity dividend.

“Government and business should continue to embrace innovation and invest in upskilling the workforce to maintain that momentum,” he said.

The Bulletin also discusses the challenge of Australia’s stagnant non-mining investment. The report surveys some possible explanations for the problem, including structural changes in the economy, shifts in risk appetite and changes in the composition of capital.

The Bulletin highlights that the mining industry experienced a decline in real output and productivity for the second consecutive year in 2021-22. There are potential signs this could reverse, signalling an increase in mining investment with flow-on effects to productivity.

“Higher commodity prices and the global demand for critical minerals could see the start of a new investment phase for mining, which could help drive longer term productivity,” said Mr Brennan.

For a full copy of the productivity insights Bulletin 2023, please visit the Commission’s website: www.pc.gov.au

Media requests

Media team – 02 6240 3330 / media@pc.gov.au

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What is productivity and why it matters?

Bulletin 2023

PC productivity insights

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