21 Aug 2022

New Zealand's productivity gap costing billions in lost gains - study

4:47 pm on 21 August 2022

New Zealand workers are working more but are less productive than many major economies, costing billions in lost economic gains and increasing burden on employees, according to a new study.

No caption

Photo: 123RF

A study by the Institute of Economic Research for accounting software company Xero said the New Zealand economy could benefit by billions of dollars if it made greater and better use of such technologies as cloud computing.

It estimated New Zealanders would have to work another 11 hours a day to match the most productive country in the OECD, Ireland, and even by another 2.5 hours a day to match Australia.

"For Kiwis working a 40-hour work week, this is equivalent to working an extra day per week to make up the labour productivity gap, and that's just to reach the average productivity mark," the report said.

Xero New Zealand manager Bridget Snelling said put another way it would mean hiring one more worker for every five currently employed, which would be a near impossibility in the current labour market.

She said the problem meant both businesses and employees were being put under increased strain.

"But these sobering numbers make it clear that we can't simply put our heads down and work our way to better productivity."

"Right now businesses across Aotearoa are spending a huge amount of time on tasks that can be automated or done more efficiently with the help of an app."

Snelling said companies, especially smaller businesses, needed to look at digitising many of the functions such as invoicing, stock control, and using cloud computing.

The report estimated a 20 percent rise in the use of digital tools would add between $3.5 billion and $6.2 billion to the value of the economy.

"Those are not numbers to be joked about, it's an incredible amount of money that would do great things for the economy, if every small business could become more productive the gains for Aotearoa as a whole would be enormous," Snelling said.

She said there was advice out there for small businesses to help them invest in digitisation to seek financial and social gains.

Get the RNZ app

for ad-free news and current affairs