Commodity prices masking falls in productivity: report

THE low road of cost-cutting and lay-offs will not deliver higher productivity in Australia's economy, a report from the McKell Institute has revealed.

In recent years, the commodity prices propping up Australia's terms of trade have masked falls in productivity, the report notes.

But while some commentators were advocating cutting jobs and costs as a way to lift productivity, report authors say making such changes will not fix the problem.

Instead, report co-authors Professor Roy Green, Dr Phillip Toner and Dr Renu Agarwal argue that innovation, better management and up-skilling will drive the solution.

One of the report's three recommendations said that instead of cutting jobs, helping employees to improve their skills, or better use their existing skills, is one thing that could help drive the nation's productivity.

The report also makes other recommendations, to "create better managers", noting Australia has a record of poor management performance linked to low education levels.

The authors' third recommendation was for the government to help businesses to innovate, by working with other businesses, researchers and teachers to find better ways to do more with less.

But the authors consistently argue the only way to improve productivity was to take "the high road", with job cuts only creating a short-term fix, creating bigger, long-term problems.

Topics:  productivity

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