David Chaston sees new challenges arriving for workers. A work-life balance will be replaced by a work-output-life balance as relentless tech changes undermine the old ways of working and measuring the value of work

New Zealand is widely thought to have a "productivity problem".

Productivity is a difficult thing to measure. And difficult to understand.

Many people have the misunderstanding it is the same is 'production' and that calls for better productivity are the same for calls for people to "work harder".

But that is a mis-understanding.

Productivity is the relationship between outputs (production) and the inputs (labour effectiveness and capital employed).

Economists and statisticians measure this through their "multi factor productivity" series. In New Zealand, this is published annually by Statistics NZ.

Many other countries still report labour productivity regularly, the relationship between the economy's output (real GDP) and the number of hours workers spend producing that output. New Zealand no longer reports that metric but we are still calculating it here, and the USA still regards it as an important economic series for public policy makers.

The OECD has recently released some standardised data on hours worked and GDP per hour worked. This is another way to look at the issue and benchmark New Zealand against our usual comparators.

These benchmarks are important. They show whether our public policy settings are making gains or not, whether we are catching up or slipping behind some key reference countries.

Further, as our public policy switches between National Party and Labour Party-led governments over relatively long time frames (9 years) we can test how each policy framework (left or right) fared using the OECD data.

Hours worked

On average, Kiwis work 20 hour longer per year than the OECD average. But we work 83 more hours in a year on average than Aussies.

In 1999, we worked an average of 1845 hours annually which fell sharply to 1761 by 2008, a period that covers the Clark/Cullen Labour government. Since then, the number of hours worked on average has been stable

Some of the countries that have the highest productivity however work a lot less.

Famously, there is a general correlation between higher productivity and fewer hours worked, especially among developed countries.

Some people get excited about the relationship.

It is not a view that is particularly flattering to New Zealand. It implies that if we worked less hours, our GDP per hour worked would go up like the northern European Union countries.

In New Zealand GDP per hour worked has been rising relentlessly over a long period.

Our problem is that the rises haven't been as strong as for others, and in the last five years they seem to have stopped.

But we don't have that problem alone; it is not a uniquely New Zealand problem. It is a puzzle world-wide.

The nature of work is changing and the value of work is changing. Some work that used to have high value (in the eyes of customers) no longer does. No-one will pay more than they need to for goods and services. There is no sustainable market for over-pricing. Automation, mechanisation, advanced software and robotisation are undermining the "value" in much work that used to be done in the late 20th century. The ending of increases in GDP per hour worked just indicates we have been slower than others to adjust to the changing nature and value of work.

As you can see in the above long-run charts, the data shows we are slipping behind many countries and especially Australia, Canada and the USA.

In the period 1999-2008 (the Clark/Cullen government), hours worked dropped -4.6% and our GDP-per-hour-worked deteriorated by -4.7% compared to the USA. Over the same period be went backwards compared to Australia by -2.4%. The less we worked, the more our productivity slipped. We were worse off economically. The northern EU model didn't pay off for us at all.

In the next nine years (the Key/English government) we made a small gain against the USA (+0.4%) and had a further small deterioration against Australia (-0.9%). We may have stemmed the decline but we didn't make any progress either. And meanwhile, others did progress.

It seems that unless we change the nature of what we do and how we do it, a return to the public policy settings of the 1999-2008 era which featured a fast rise in the size of government relative to the size of the rest of the economy will accentuate the relative slippage down the international productivity rankings.

It is what we are doing and how we do it that needs to change.

The fastest way to undermine any productivity progress is to use a lower exchange rate to drive NZD income gains. (NZ First policy.) All that does is incentivise uncompetitive, unproductive work.

And paying more for the same work and the same outputs is also a false path.

There is no doubt we need to pay New Zealand workers more - it is unarguable that Kiwis are underpaid compared with workers in countries we like to benchmark ourselves with. But generally higher incomes are not justifiable without a rethink on what we are doing and how we are doing it. Only when the outputs rise faster than the inputs can sustainable real gains be afforded. Without that, workers seeking better compensation will be incentivised to move to countries where the work-output balance is structured more favourably. A shallow focus on a 'work-life' balance will always lose to a deeper focus on a 'work-output-life' balance. It is what you produce, and not the hours you expend, that will enable you to have a sustainable balance in your life.

The sudden arrival of new technologies that replaces some work as we know it can complicate the picture.

Technology, robots and AI all seem to capture the benefits for 'capital' rather than labour. When autonomous vehicles arrive [soon], and it will be services like Uber who launch them first, although trucking companies will be fast followers. The cost of delivering stuff will fall. (What consumer will pay extra just so cars or trucks have human drivers?)

It used to be that when a worker's income rose they could choose the number of hours they worked. They had a choice between work-and-higher-income and work-and-sufficient-income. That is what we see in those northern European countries.

But if new tech captures all the gains, where will that leave workers? And how will we then measure productivity? Overall productivity may rise, labour productivity may rise even faster for those in work. But for the country as a whole, labour productivity may fall. We won't notice at first because we won't be counting the hours of those not working.

New Zealand faces these challenges from a strong position, even if our GDP-per-hour-worked is not the highest. We have a very healthy participation rate; over 70% of Kiwis aged 15-65 years are employed in the labour force. Most other countries (the US, Canada, Australia included) can only dream of such comprehensive participation. But we won't be immune to technology changes.

And the main gainers from those changes will be investors and other already high income earners.

Our challenge will not be to hold technology at bay. To do that will make our economy uncompetitive. Our challenge is going to be how to shift more people into jobs the world will pay a premium for.

Technology will make many things cheaper. We will still need to produce more per hour so we can have a choice as to how many hours we want to work.

And we will need to measure our outputs better. We know with some precision how many hours we all work. But we don't really know what we are producing as measured by GDP. It is such an old-fashioned accounting of 'output' that it misses much new and valuable work-output being done.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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59 Comments

This is probably too simple but have always believed that if wastage, or inefficiency if you like, is reduced then productivity will increase. For example the high speed and ready availability of communications these days, amongst the very real value it provides, has to my mind though produced a heck of a lot of counterproductive waffle and some of that includes and allows, plain old duck shoving. Have watched with amazement some “degreed” young one spending hours designing a wonderful template to send out production orders for example, but have no concern at all about the accuracy or even viability of the actual order contained thereon. There seems to be also a worsening trend whereby corporates nowadays have only concern to the cream on top of the pail rather than the milk falling through the holes in the bottom.

The rising minimum wage will mean NZ employers are going to have increasingly look at mechanization over the next few years. Robo - builders?!

The impact of autonomous vehicles on society in next 15 years will be massive.

I think the jury is out on whether autonomous vehicles will become mainstream any time soon. I am not saying they will, or they will not, but I think that could be some time off...

In 15 years I'd be very surprised if less that 20% of human transportation is non autonomous.

There's an arms race going on with vehicle manufacturers. Autonomous vehicles bring along the opportunity to corner a market. It's not just about building the car, but building millions of them so they can own the transportation industry.

In markets like this you typically have one big player, one smaller competitor, and a bunch of other companies losing money trying to compete. None of the current manufacturers want to be one of the losing money small fries.This fear is what's going to drive rapid adoption.

there is no doubt that once the technology and legal hurdles are overcome the majority of traffic on the roads will become autonomous. It'll start with trucking companies (if the pollies allow it) because it's a non-brainer, pay $80k/year for a driver (wages & benefits and overhead) or pay an extra $100k up front on a truck that will drive itself 24/7 for the next 10 years, never go to the pub and call in sick, never need to worry about logbook hours or thrashing the truck.. the question is how soon. And i don't think it'll be as soon as some people think.

There seems to be a trend for skilled jobs with responsibility to have huge workloads while lower-middle jobs are getting increasingly marginalised or made more precarious.
A job is becoming an all-encompassing Demand on people.

Thanks David. Labour-saving technology is responsible for the high standard of living we enjoy (relative to pre-industrial periods). Otherwise we’d be out in the fields right now rather than at our computers.

But new technologies can also be incredibly disruptive. Livelihoods are replaced by machines. we need to minimize the disruptive effects by investing in education and retraining...

You ended by talking about measuring output better - any further thoughts on how to do that?

Cheers for the interestie award by the way!!

What are you thinking people could be better trained and/or educated for? Even brain surgery will have robotics in it. What will be needed is having all invested in the technology, machinery and robotics so that a return can be made to them in order for their to be anyone who can actually afford to purchase what it all turns out. Changes are going to go way, way beyond what we think we can see ahead. Capitalism will not survive these changes.

Bring on the tech, the real tech, stop spreadsheet thinking. There is not enough tech being deployed to assist people.
Look at the terrible productivities coming out of our large civil & construction projects and works. This is about getting the project management right again. The waste and fiddles (including those hrs never worked) are epic.
Look at MPI.
Look at every day stuff. Look at the pain people have connecting and transferring internet fibre services. Told of a techician call out with a job number more than a year old, not the current one (different work, different people). So while connections working, the customer system said fault because the two systems behind it were never integrated/configured/tested properly. Then for 2 days the service providers off shore tech support wanted to book with the customer the tech visit that had just occurred.

The tech & its set up become critical. Comes from the top.

Well it is very difficult to attract experienced and well qualified IT staff to NZ (Especially Auckland) due to the high cost of living and low wages. Speaking as someone who works in the technology industry, this means that IT people are having to work very long hours here. With some companies people are regularly working 80 to 100 hour weeks.

Still at least Japan is taking more measure to look after their employees health:
BBC Article: Japanese firm to use drone to force overtime staff to go home
http://www.bbc.com/news/world-asia-42275874

CJ
My company never had a problem finding suitably qualified IT candidates
Perhaps it’s because we actually delivered the right applicant a top salary package
Subjectively I always found those in IT excellent albeit lacking in social skills !
I’m sure artificial intelligence will come with improved skills like “Please & Thank You” something that evades
many these days.
Redistribution of wealth is going rather badly since the Trump “ taxcuts” are 83% favourable toward the top 1%
rather than the working classes
As long as the population are manipulated by the elite through the likes of Fake Fox News & Breitbart the revolt to deliver wage equality won’t happen anytime soon here in the US.
What amazes me here on this blog is so many here are in IT yet fail to move to higher paying employment elsewhere ?
NZs great but not exclusively so.

Money isn’t everything. Better balance in NZ, if you are good at your job you still get paid well.
Tax in places like UK is pretty bad as well once stealth taxes and NI added on. Working almost 6 months of every year on behalf of the government can be a bit depressing!

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I'm not sure it's a tech story David. Seems to me that we have huge inefficiencies created by the ownership system.
First. Companies do well by achieving control, productivity comes a distant second. You can confirm this by reading the populist share price analysts in the newspaper. They value market control over efficiency. The company skill and technical productivity does not figure highly. It's well down the list in their writing.
Second. Consider the ridiculous prices a big company pays at times to take out a smaller competitor. Indeed it's traditional business play to build up a business with the goal of being paid big bucks to be bought out by the old inefficient incumbent. (Hot water cylinders for recent example).
Third. There are huge barriers to entry to business in New Zealand
You can't tell me the second proc3ess is improving 'productivity'
I am a believer in free markets, but the way I see it that is the last thing that big business wants. You don't get free markets with an easy handed referee. It sounds back to front but without strong law big business always aim to sucessfully suppresses free markets.
Free markets are the solution. Imagine if we had a minimum of twelve supermarket chains. Small producers and new producers would have a chance for entry. Efficiencies would develop and new products would replace the old. We would have innovation.
Not going to happen under the current system. The two current chains have no interest in developing new entrants. It's not in their self interest to do so.
I also think we need to spread ownership more widely. Promote small business and restrict big ownership from overseas. More owners, more local, and smaller.
Perhaps others can think of examples of the ownership stranglehold.

Our biggest company frets constantly along these lines. From forty odd years ago when NZDG and Kiwi started down the Line of acquisitions rather than innovation to build. There is now a constant worry of loss of market share as if that is the only possible way to maintain milk price and dividend.

I had to look up who NZDG and Kiwi were
Found it here in an article dated June 2000. Given the number of newcomers and new arrivals and non-originals since that date many probably wouldn't know what you are referring to
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10454

Have been giving some thought to the size and number of companies both owned and operated or simply operated here in New Zealand. Wanted to see them by size of capitalisation - wasn't easy to find - can find the componentry of the NZX50 in alphabetical order but not by capitalisation. It's like secret-mens-business - it's hard to find quality information - anyway try this

https://www.tradingview.com/markets/stocks-new-zealand/quotes-large-cap/

Alternatively the top 10 companies according to Croaking Cassandra
Fonterra
Spark
Air NZ
Ryman Health
Kaingaroa Forest
Auckland Airport
Transpower
Z Energy
Meridian Energy
Mercury
https://croakingcassandra.com/2017/11/27/an-underwhelming-top-200/
Note the absence of Fletcher Building
Fonterra and Kaingaroa Forestry only 2 outfits producing anything

NB: they don't include the 4 big banks operating here - to all intents and purposes they are privately owned - but the capitalisation list above gives some indication of the size of the NZ based subsidiaries

What I find interesting is of the NZ-Top-10, Four (4) are in the energy business. You won't find any energy companies in the ASX-top-10. If you follow the dominant business publication National Business Review or Interest.co.nz you will find total silence about the NZ top 10 - if you want to know what's going on you will never know until the dominant news outlets start covering the day-to-day mundane trivia of big-business in all its glory, warts and all. NBR populates itself with a lot of small-time gossip hidden behind paywall's

As Croaking Cassandra observes
"In the NZ Herald there was a weighty supplement headed “Dynamic Business”, reporting/celebrating the results of the annual Deloitte Top 200 (companies that is) business awards. It seemed to be an opportunity for mutual self-congratulation, bonhomie, and a bit of virtue-signalling thrown in as well"

And that's about the size of it

The future may be a tech story but first lets explain the past. How is NZ a low productivity country? Before I arrived (2003) all the Kiwis I'd met in London and the 3rd world were generally more productive than their colleagues (similar brains to others but much more down to earth, practical and adaptable) so until I started seeing these figures I would have expected NZ to be at the top for productivity and certainly not doing so badly. My answer is the good Kiwi goes and works abroad and the new kiwi such as myself takes their place. I was a very experienced IT professional and the job I filled was advertised in Auckland but no Kiwis applied. I've met many good Kiwi programmers abroad but the salary and conditions didn't tempt them home.
Now retired and with hindsight the last 70 years of high immigration has caused NZ to gently and slowly move from No1 to number 35 in the OECD - importing cheap from abroad and I realise that included myself. Maybe more so with the fraud prevalent with recent low-skilled PTE graduates - waiters disguised as Chefs, checkout operators disguised as retail mangers and minor IT disguised as experienced programmer-analysts. If the rorts and fraud were eliminated it would allow the honourable honest companies to flourish and allow the statisticians some true rather than false data to process.

Your observations about most productive Kiwis being tempted away are largely correct.
Your conclusion that somehow high immigration caused that are not really based on anything at all ( other than your instinctive resentments perhaps ) .

High - skilled emigration from NZ is an unfortunate ( from NZ perspective ) thing that always happened and will happen ( there are just too many richer pastures in the world ) .
Not replacing the emigrants with immigrants would not help that but only make NZ more of an economic backwater than it already is .

Thanks for the comment. I do worry about 'my instinctive resentments' - that is a fair call. I'm not against immigration just not how NZ is doing it. NZ still has a great lifestyle (rule of law, climate, space to live, etc) that would and still does attract real talent despite our wages being lower than most OECD countries. I would love to see those top PhD IT graduates from India choose NZ not USA. I remember reading about a Chinese female mathematician who can factor large numbers better than anyone else alive - I would be scattering rose petals in front of her if she chose to become a professor in NZ.
My grumble is about the move to 3rd world wages at the bottom - who is working our checkouts, nursing during the night shifts, selling petrol, serving take-away food? To often the answer is easy to get and easy to exploit immigrants not our unemployed. We have fraud (see Prof Stringers report) and rorts that would go away with more Labour inspectors and small tweaks to the immigration rules.
However like most readers of this website I enjoy cheap takeaway coffees and the ever increasing price of my house - institute sensible immigration and I would lose both.

12 supermarket chains in NZ, that would be great for about 15 minutes till they cut each others' throats and one or two emerged supreme. BTW restricting big business and promoting smaller ones is not the free market. I do agree with the sentiment, but don't be kidding yourself that what you want is a free market.

Re the supermarkets a monopoly or duopoly is not a free market. At least three players are required and the ComCom should split New World and PaknSave (fairly easy as the the retail part is already split) to achieve this. And also price regulate TradeMe as well.
Freeing up planning regulations would also help supermarket problem. Why can't you build a supermarket as of right in a rural area for instance? No difference to a big farm shed.

No argument, what I say is, that in a free market it would not be long before the big players forced it out, one way or another. That is what "free market capitalism" does. Raisson d'etre really

Pocketaces. It's terminology we disagree on l think. Obviously a strong referee is not a purist free market. And without that referee monopolies result, which is not a free market either. As you say.
But lets call the objective 'open markets'. I think they can be achieved, 12 supermarket chains and all. With a vigourous productive business and employment environment resulting.
Does need the ref.

You are never going to get 12 supermarket chains operating in a country of 5 million (and hopefully not too many more), you might have a return to smaller local stores, but I seriously doubt you would see much in the way of price reductions, as suppliers would have the upper hand and would demand a decent price for their produce, as they bloody should.

Pocketaces. It's terminology we disagree on l think. Obviously a strong referee is not a purist free market. And without that referee monopolies result, which is not a free market either. As you say.
But lets call the objective 'open markets'. I think they can be achieved, 12 supermarket chains and all. With a vigourous productive business and employment environment resulting.
Does need the ref.

How is "Measurement of productivity in NZ" conducted

Measurement of productivity is difficult in some service and government-dominated industries.

On the measurement side, the ability to gauge productivity varies across the economy. Measurement difficulties are generally greater in the service industries, especially government. For example, in the case of government non-market activities (eg, education, health, administration and defence), services are provided free or at nominal charges. In the national accounting statistics, the output (value added) of these activities is largely measured by inputs, such as the number of employees. Using changes in inputs to measure changes in outputs implicitly assumes zero productivity growth.

The productivity work of Statistics New Zealand (SNZ) is focused on the so-called “measured sector”. The measured sector excludes industries in which outputs are not adequately measured independently of inputs. The latest SNZ estimates are for a measured sector that makes up around 73% of the economy. This version of the measured sector approximates the “business” or “market” sector and hence the firms that are seeking the best mix of resources to exploit market opportunities and earn profits. Australia has a long history of publishing official market sector productivity statistics. Although extending the coverage of the SNZ measured sector to include government non-market activities is useful, there is arguably still a case for retaining measures that focus solely on the business or market sectors.

The measurement of productivity in New Zealand still has some gaps despite recent improvements. Some gaps will be addressed in the near term (eg, wider industry coverage in the measured sector) but others are longer term (eg, productivity by industry, including in education and health, and productivity levels).

http://www.treasury.govt.nz/publications/research-policy/tprp/08-02/03.htm

Note: Government Fiscal Expenditure plus Government own account spending accounts for approximately 50% of total NZ GDP

And evermore big business has been shown to be dishonest, especially in regards to advertising and product labelling . Indeed, often dishonest to the degree they threaten our health. Plus the many deliberate rorts (cars, i-phones etc) that are being brought to our attention. It is not only bad governments that commit crimes against humanity. Calls by big business for smaller government is simply to allow themselves more opportunity to avoid responsibility.

Information that is essential to any such debate is the sizes of measured sector and the un-measured sector over the past 20 years. One can guess the un-measured sector has grown dis-proportionately more than the measured sector thus it is not possible to do a simple extrapolation. Remember also that the measured sector is labelled "measurable". That doesn't necessarily mean SNZ actually measures the entire sector

unless we change the nature of what we do and how we do it, a return to the public policy settings of the 1999-2008 era which featured a fast rise in the size of government relative to the size of the rest of the economy will accentuate the relative slippage down the international productivity rankings

There's the issue in a nutshell. It's pointless boosting productivity in the tradeable sector if the drones in the Gubmint/non-tradeable sector drag the average down yet again.

An example from the building sector. Think back 20 years, to what did not exist (or if it did, to a much lesser extent) on construction sites then:

  • Scaff for any work at over 2.4m
  • Fencing of entire site
  • Fall protection for the roof/second and higher plates (often in existence for a fraction of a day....)
  • Certification quarterly of all electrical outlets, cords, tools and patches to mains (ever wondered why most tradies use honking great battery operated gear, and charge the batteries using a PSW inverter in the back of the ute?)
  • Elfin safety briefings at the start of every day ('Let's be Safe out there'), consuming 0.25-0.5 hours of otherwise useful time
  • Notices and event registers to keep the brown cardies satisfied

.

Now tot up the $ cost, and the hour cost, and weep....

Way mad
In US there used to be no tethering required when trades were working on house roofs People often died every year falling off the roofs of houses under construction
These were often highly skilled electricians & plumbers etc.
Here the use of scaffolding is reduced substantially by mobile mechanized scaffold platforms used on
multi storey apartment construction everywhere. No erection or dismantling required.
In NZ you be fortunate to have a single one of these on any site today.
Trades use portable cordless power tools more often today primarily because they are far more powerful today & are far more convenient than running out electrical cables
NZs problem is a lack of critical mass of mechanization
Tax write offs on capital invested in mechanization used to take years which also contributed to the lack of investment. I hope this has changed to immediate write off but I guess not.
As for IT jobs NZ is hardly the place to build a career without running a rental property business to make ends meet
The article alludes to the current working paradigm is being modified and will continue to be modified regardless of if we acknowledge the facts or not
I agree it is time our politicians looked a little ahead to foresee the coming changes which will impact the lives of all citizens

Yeah have you finally figured it out yet NL? We have Silicon Valley house prices without the wages here in Auckland. Guess there's been something fish has been going on to drive up our house prices to such extremes.

https://www.justice.govt.nz/justice-sector-policy/key-initiatives/aml-cft/

CJ why your vitriol?
You may need a holiday !
Merry Christmas
Happy New Year NZ

WM Just on yr pt : 5, not much use in that anyway, nobody can ever hear anything over and above the blasted radio!

The fastest way to undermine any productivity progress is to use a lower exchange rate to drive NZD income gains. (NZ First policy.) All that does is incentivise uncompetitive, unproductive work.

RBNZ policy too?

ANZ Bank’s gauge of business sentiment has slumped to depths not seen since the global financial crisis, when the economy was in recession. While some of that is likely due to the business community’s grumpiness with the election outcome, a prolonged funk could curb investment and hiring and hurt economic growth.

The economy expanded a healthy 2.7 percent in the year through September, and the statistics office this week revised significantly higher its estimates for gross domestic product over the past four years. Yet annual growth has slowed from 4.4 percent in mid-2016.

“The figures still show a marked slowdown in 2017 and I think the economy will continue to lose momentum into 2018,” said Dominick Stephens, chief New Zealand economist at Westpac Banking Corp. in Auckland. “One of our key calls for 2018 is a lower exchange rate as we move from ‘rock star’ to ‘has-been’.”

Westpac predicts the New Zealand dollar, which has weakened 4.2 percent against the greenback since the Sept. 23 election, will continue to fall in 2018. It forecasts the kiwi will drop to 63 U.S. cents by the end of the year from 70 cents today. Read more

The Government has tried to fool the sheeple by saying it is fiscally responsible, yet their forecasts are reliant on the tax take increasing 4% every year i.e. they balance the budget by predicting perfect conditions. The customers I deal with do exactly the same thing. Only an idiot gives their bank a business case that doesn’t show the ability to pay, it’s the same here. Inevitably things happen and the forecasts are proven wrong. Debt payment suffers and they end up on the high risk loan department. Let’s hope the mess is easy to clean up.

This article claims labour productivity is merely a side effect of lack of demand, either internal or external.
It compares two similar economies, France and England, with differing views of labour regulation.
if it is an insight we may consider our stance on a reduced deficit as a contributing factor.
disclaimer...im not an economist, I read for entertainment.
http://www.primeeconomics.org/articles/o91sdlu312b90filbobylfincxj5sb

Robots coming....they are already here. Rubbish truck have only a driver now, not a team of guys. Self service at the supermarket, petrol station, and airport checkin. Sawmills operate robots now. Car assembly has been done by robot for years. In IT a lot of lower level work is done by software all but eliminating a whole teir of jobs. This is just the start.

As wages go up but the demand for lower priced goods sold over the internet increases expect lots of jobs to go this way. If your job involves any sort of machinery operation be afraid.

Probably Americas only hope to compete against cheap global labour.

Average Man
Our hospital has surgical robotics
A few years ago 15,000 operations were performed in US hospitals by surgical robotics
I won’t speak of IT as there’s a plethora of experts here who profess they know everything

If your job involves anything, be afraid, because where do you think all those displaced by robotics and technology are going to look for an income. Correct, it will be in the areas that it is difficult to replace humans and those sorts of jobs are not going to increase rapidly, but the numbers of people seeking them will. The way we do stuff now, is going to change, probably completely.

Productivity, production, robots, efficiencies, labour, all pale into a black hole of insignificance when considering the wealth and standard of living of our little nation,both now and in the future. New Zealand was economically put to the sword by the National Party (under Muldoon) in 1975: he summarily terminated Labour's new NZ Superannuation Scheme on winning the election after he campaigned that such a scheme would turn NZ into a communist state ( those old enough will remember National's 'dancing cossacks' tv ads leading up to that election).
See below some of the long term harm National's scrapping of this scheme did to the country, sufficient to say that that fund would now be be worth substantially more than 500 billion dollars (i.e. over half a trillion dollars) instead of a measly 36 billion dollars it is today (barely enough to rebuild Wellington when the big one strikes); the damage thus wrought is methodically and succinctly, with supporting facts and figures, set out in Brian Gaynor's column in the NZ Herald business section of Saturday November 4th 2017.
The financial paparazzi been stunned into a deafening silence by this article; I have not seen a single comment on it since it was published.... I mean what is a top fund manager and respected financial commentator doing dissing the National Party!
And just to top it all off a National government (Bill English this time), suspended annual government contributions to a new NZ Superannuation Fund launched by Labour's Michael Cullen in 2001.
The moral of the story is that whereas Labour wanted to lift all NZers' standard of living, National's
blinkered vision has lifted the wealth of its cronies only, by way of investing in residential property; and ironically, we all know how efficient the construction sector is!
Just a few of the benefits Gaynor mentions if NZ had stuck with Labour's original scheme:
we would probably be the Switzerland of the South Pacific.
we would still own the ASB bank, BNZ and other overseas companies since acquired by overseas interests
our entrepreneurs would have a plentiful supply of risk capital
NZers would probably own several large Australian companies
most NZers would face a comfortable retirement and be the envy of their Australian peers
the NZ Government would have a substantial Budget surplus
we would have one of the world's best public healthcare systems
a far better highway system, and so on

The blue-suit brigade have stuffed this country.....they rejected that hoary old chestnut: SAVING
Any other suggestions for improving productivity or similar is just toying with the leftovers.

Have a good Xmas.

Great commentary. I would love to see a rebuttal from a National Party MP, or similar, to present an alternative view and explain just why it was necessary to suspend payments to the superannuation schemes instituted by the Labour Govts. I can only think it was sour grapes on the part of National! Disgraceful really.

Very simple - the Government in 2009 was running massive deficits post GFC and without the benefit of hindsight - it was near universally agreed that additional borrowing to effectively invest in the share market was a very high risk that the Government should not undertake.

Budgets are a matter off priorities. National prioritised such things as tax cuts, Finance company investment guarantees, handouts to smelter companies, short term nonsensical infrastructure projects etc.
National has always underrated long term thinking.

And now a profligate Government is expecting to blow the largesse of their forecast GDP increases on $4 billion of extra spending every year until 2020, all coming from tax payers. Taxinda is an appropriate moniker.

Remember it well - that was the price New Zealand paid to have a Muldoon led National government. Have yet to see any dividend from that decision. You will wait till the cows come home to see any benefit from the Bill English suspension, if any.

Here is Bryan Gaynor's article
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1194...

Australia's compulsory superannuation scheme commenced 1992
It is now worth AUD $2 trillion
At the same time the ASX capitalisation is AUD $2 trillion

Worth remembering the ASX recovered after the 1987 market rout - while NZX never did recover

One could say we are still paying the price for Muldoon's political act of sabotage

The Australian Stock market recovered nicely after the global stock market crash of 1987. The NZ stock market was decimated. Massive destruction of value and savings and lives. New Zealand didn't have an Australian style fledgling superannuation industry to prop up the market. The NZ stock market never recovered its aura of trustworthiness and reliability and stability. That was seen with the pouring of savings into the Finance Industry during the late 1990's and early 2000's only to be slaughtered again by the $9 billion evisceration of 63 Finance companies including South Canterbury Finance.

Unsurprisingly, with nowhere to hide Kiwis have turned to property with a vengeance

They still don't show any faith in the Stock Market in any large numbers

And, while we're at it -

Headline - Foreign ownership of NZX rises in 2017

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1196...

Exactly, Muldoon's fateful Superannuation decision in 1975, was the single most wealth destroying action made by any political party in modern NZ political NZ history. it is interesting to speculate where we might be, if it had run unimpeded for 42 years. The third worse decision was the Key/English decision to suspend payments in the NZ superannuation fund, near the bottom of the equities market, missing out on 10+ billion dollars of capital appreciation when the markets bounced back in 2009/17. To my mind, that decision indicated appalling financial incompetence and I vowed never to vote National on that basis alone.

If borrowing to invest in equities was such a no brainer in 2009 - there must be hundreds of individuals who mortgaged their home to do the same.

Problem is I have yet to meet a single individual who did this.

Maybe not such a smart idea after all.

Hindsight is a wonderful thing or as Buffett has stated - the view in the mirror is always so much clearer than through the windscreen.

Yeah but wasn't John Key meant to be the financial genius who could predict markets? Yet he sold off the power companies. The sale price has already been eclipsed by the dividends/gain for the shareholders. I aint no genius but even I could see that one coming.. Power isnt going out of fashion any time soon you know. Who exactly was John Key governing for?

The Jones - said like someone who has no idea about financial markets. Anyone who works or has worked in financial markets for many period of time understands that NO ONE in the world can predict the path of currencies, interest rates and equities. And John Key being one of the the smarter of those would have been the first to know that. He is also smart enough to have known that youre better to get rid of debt, especially when distaster threatens as it did in the early years of the GFC, by selling some assets, rather than clinging to an asset that the public could equally own. Youre the one doing the forecasting here about the ongoing good fortune of power companies - I own some, but wouldn’t if it was still the GFC, and still had debt that was a struggle for anyone to refinance back then

You don't have to be a genius to successfully invest. There's only two basic principals one has to follow.

Diversify. Don't invest in a single market/asset type. Spread your investments wide.

Dollar cost averaging. Keep investing regular amounts even in what you perceive to be low or high markets.

National failed to follow either of those basic principals when they stopped investing in the NZ super fund.

To the extent we regularly measure productivity as GDP per Capita and the fact that Exports add to GDP - Imports subtract from GDP - one can argue that the very high exchange rates of years past have impacted on this measure of productivity.

This argues not for a low exchange rate - but a lower rate than the extremely high rates of recent years.

I am of the view that we must consider the FX variable in any debate on productivity in NZ.

Can anyone more competent assist and critique with this line of argument ?

Meanwhile as we all settle down to enjoy Xmas, let us remember - Ours is not a perfect world - it's just better than all the rest !

Merry Xmas to all !

The Bright Future...with automation. Will sleigh one and all.

The sooner we automate Government to give, not take, plan for all our futures, not their pensions, wages and expenses, their flights of fancy, their self indulgent automatic pay rises, the sooner will all benefit from automation. We would only need computers, programmed to provide balance, not one sided twits.

The sooner Awkland becomes a minor deal, not automatically amalgamated into one big mess, the sooner Awklanders may be able to see their residences as homes, not Capital accumulation. Cos it ain't the Capital of NZ, it is mostly a waste of space, time and gridlocked.

Efficiency can be made with automation, efficiency means not wasting resources, not over pricing them. but making best use.

With this regard I suggest Santa can run the World as he delivers in one Day, what the whole World makes in a Year. A Capital Idea that would save us all Money.

Merry Christmas to all our Readers. Interest may be compounded. But it is ring fenced...Ding Dong.

A New World order for me is to Automate Bwankers too in the New Year. It would be in the Interests of Savers, not speculators...who pushed Houses through the roof...

Santa says....my Land Banking is a slippery slope, when Hedging the sledge....rein it in deer ..one and all...

We cannot go through the roof forever. You tin pot Twits.
Automation Policy should start at the top...work their way down...Tighten yer belts..

Signed
Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner, and Blitzen ...Get some common sense...all you Twits.

PS...Santa cannot deliver, this year...we is on STRIKE.

.

The inverse relationship between hours worked and productivity (from the graph of comparisons) may be overstated. I imagine that countries with vast deposits of easily-extractable natural resourses and low population densities would have a huge productivity advantage over others.

I think we should benchmark ourselves ourselves against france, high tech, great wine, beautiful women, what is not to like?

Positivelywallstreet - That’s exactly the benchmark that the new Labour Govt intends to emulate. NZ’s current 24% and falling debt to GDP has to be reversed quickly to try to emulate France’s 97% and growing one - a lot more debt will make us a lot more prosperous. I have no doubt that this Govt is up to it.

Previous one sure was, eh?