Australia’s labour productivity continued to gradually decline last quarter, according to a report by the Productivity Commission.
Productivity fell by 0.1% in the December quarter, and by 1.2% across 2024. Both output and the number of hours worked grew, rising by 0.6% and 0.7% last quarter.
“The pandemic and the policy response to it drove a sharp rise — and then a crash — in measured productivity. Now that the dust has settled, we're back to the stagnant productivity we saw in the period between 2015 to 2019 leading up to the pandemic,” said Productivity Commission deputy chair Alex Robson.
“The real issue is that Australia's labour productivity has not significantly improved in over 10 years. With global policy uncertainty again on the rise, addressing productivity directly via targeted reforms will be the best way to sustainably boost Australians’ living standards.”
Output rose by 1.3% in 2024, below 2023’s output of 1.5%. Hours worked increased by 2.5% last year, outpacing 2023’s 1.5% growth.
Agriculture, forestry, and fishing saw the largest year-over-year boost in labour productivity last quarter at 4%. Rental, hiring, and real estate, along with ‘other services’, posted the biggest declines at 2.6% and 3.6%, respectively.
Labour productivity has flatlined in recent years, the report found, after declining by more than 6% in 2022 and 2023 following the pandemic-era productivity boom.
This is partly due to Australia’s economic recovery from the pandemic, which included high rates of employment and hours worked. According to the report, infrastructure and equipment supply lagged behind the increase in labour and new workers required additional training, lowering productivity.
The Federal Budget this week projected 1.2% long-term productivity growth, with the government saying that it would seek to increase productivity by banning non-compete clauses for low and medium-income employees.
Related content
