The dangers of our productivity slide

From The Detail, 5:00 am on 19 July 2023

Our productivity figures are pretty awful – but why is that such a big deal? And what's wrong with our 'she'll be right' ways? 

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 New Zealanders work more hours per week than other OECD countries, but are only 68 percent as productive. Photo: 123RF

Imagine the Black Ferns going on to the rugby field with just 11 players versus 15 opponents. They might still win but it would be much more difficult.

That's where we stand as a nation when it comes to competitiveness, says Geerten Lengkeek, whose firm Productivity People advises businesses on how to lift their game.

Lengkeek uses the Black Ferns analogy to describe New Zealand's poor productivity record and how it affects the way we live.

The latest annual report from the Productivity Commission shows that New Zealanders work more hours per week than other OECD countries but we produce only 68 percent of the average OECD nation.

Productivity is measured as gross domestic product versus full time equivalent jobs (FTE), or the income we bring in as a nation compared to the hours that we work.

Lengkeek calls the 68 percent disturbing, pointing out that we're not lazy but inefficient.

"It means that the other nations are further ahead than us, it means we bring in less national wealth. With less national wealth we can invest less in the things we really care about in the country."

That in turn means that our wellbeing and our standard of living is affected. If it continues it will hurt future generations but the impacts are already being felt, he says.

"New Zealand has been slow to fund certain drugs that Pharmac hasn't been able to fund, we've been slow in being able to take corrective action against climate change because we just haven't got the funds in New Zealand to invest in the things that we care about.

"Education, healthcare, those are all really important topics for everyone in New Zealand and we have to make sure that we have the national wealth to be able to continue to invest in it."

It's not just about the money, it's how hard we work for it, he says.

"A worker who has had a productive day will go home satisfied, versus a worker who has been firefighting constantly and after 10 or 12 hours they haven't achieved anything, even though they put a lot of elbow grease into the job that they have done."

Lengkeek, who came to New Zealand from the Netherlands 30 years ago, tells The Detail how Kiwi quirks like 'number eight wire' and 'she'll be right' attitudes are a help and a hindrance to productivity.

He also jokes that the Dutch reputation for being direct can also be tricky when he gives advice. "We go into the workplace and we ask questions .... 'why are you doing it this way?'" 

One of his clients, Sequal Lumbar, custom cuts radiata pine. Executive director David Turner has been working on improving productivity at his Kawerau plant for nearly a decade. 

He says Kiwis tend to shy away from systems, processes and routine. They love to come up with innovative solutions but are less interested in whether they lead to better results.

"The process of engineering something different excites us," he says.

He calls it an "iterative process of improvement that flows up and down, but for us the general trajectory has been up".

"The mark of a successful organisation isn't necessarily one that jumps up 100 percent every year, it's one that grows point-one percent of every week."

But Turner says improving productivity in the workplace is one piece of the puzzle and New Zealand will not progress up the OECD ladder until the government changes policies to encourage value added manufacturing.

Find out more about why our productivity is so low by listening to the full episode.

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