Productivity woes endure in March quarter

Productivity, a concept treasurer Jim Chalmers recently described as too often seen as "cold" and "almost soulless," despite it being, as he also noted, the best way to improve people's lives over time, was stagnant in the March quarter and declined over the year, according to the latest figures from the Productivity Commission.

Productivity Commission deputy chair Alex Robson said Australia's productivity problem is no flash in the pan, calling it a "long-term, structural challenge".

He said the problem demands dedicated attention from both business and government.

Against this backdrop, Chalmers in his speech to the National Press Club on Wednesday said that productivity is the government's primary focus.

Chalmers said that boosting productivity is about empowering workers, not undermining their rights, and making the most of Australia's human capital.

He said the government has a role in getting the policy setting right but added that "businesses need to step up too."

He later noted that the roundtable he's convening in August, which will bring together a focused group of participants from government, business, union, and civil society, will be a "genuine attempt to find common ground if it exists."

The government, he said will keep an open door and open mind and consider any affordable ideas where there's broad enough consensus about the way forward.

Productivity Commission researcher Rusha Das said declines in hours worked per person are among the most unsung benefits of economic development and productivity growth.

She highlighted that in the last 150 years, rising income in the industrialised world has been accompanied by a steady drop in working hours by almost 50%.

"Productivity growth has helped people find thousands of extra hours of free time each year," she said.

But with stagnating productivity over the past decade, "the rewards have been far less generous," with almost no improvement in output per hour worked since 2016.

She said high average hours worked could reflect stronger workforce participation or improved access for historically underrepresented groups.

"But it's concerning if Australians have been working more out of sheer necessity, sacrificing study, rest, or time with loved ones just to maintain their standard of living," she said.

"For example, people may need to work more just to keep up with rising house prices, which has outpaced wage growth over a long period of time."

She added that productivity growth is the engine that gives people the freedom to choose between more income, more leisure, or a better mix of both.

"When productivity stalls, those choices remain unchanged," she said.

"If productivity declines, the choices shrink. This is why implementing policies to ensure Australia works smarter, not longer and harder, should remain a priority for policy makers."