According to recent analysis, Australians are working longer and harder but not smarter in an attempt to increase their pay packets, which is driving a sharp decline in productivity.
The Productivity Commission published a new report on Friday that showed that although Australia saw a record-breaking rise in hours worked—up 6.7% in the 2022–2023 fiscal year—economic production had lagged behind.
Furthermore, during the same time period, the country’s productivity, which gauges how effectively labor can generate goods and services, fell by 3.7% as a result.
If the country’s poor productivity growth isn’t stopped, economists fear that living standards will continue to decline.
The Commission’s deputy chair Alex Robson said while workers had benefited from taking on extra hours to boost their incomes, they would struggle to replicate this strategy to get ahead in the future.
“Australians’ incomes grew in 2022-23, mostly because they worked more hours. But productivity growth is about working smarter, not working harder or longer,” Mr Robson said.
“Given our labour force participation rate is near its historical high, we won’t be able to rely on working harder or longer as a source of income growth moving forward.”
Even worse, Mr Robson warned that easing inflationary pressures could rebound if higher wages weren’t supported by a commensurate increase in productivity.
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