OPINION LEADERS The Productivity Connection

It is interesting how much more emphasis is being placed on productivity these days. Having been through an era of knowledge waves and innovation, there is now realisation that increasing productivity is key issue to our growth.
The formation of the Government’s Workplace Productivity Working Group (WPWG), while admirable, is symptomatic of this new interest in exploring ways of increasing productivity in nation, which is increasingly vulnerable because of relative decline in economic growth. The WPWG however, has an extraordinarily narrow focus.
The key areas that will be considered by the WPWG will be:
* Managerial capability and human resource development;
* The way ideas and technology are adapted and adopted by firms;
* Workplace and employment relations and practices.
The WPWG will be required to report to Government by August 2004 with forward agenda to lift workplace productivity. Good stuff! However, in my opinion there are some uncomfortable parallels with the Compliance Cost Advisory Group, formed by Government, to examine issues relating to business compliance.
While the Government maintains many of the recommendations from that compliance group have been adopted, there were certain no-go areas that were fundamental to improving compliance. Specifically areas around tax, accident compensation and significant changes to the Resource Management Act were definitely “off the list”. We can tinker with compliance for as long as we like but unless we address some of the fundamental issues, the complexity and difficulty of doing business increases.
When looking at workplace productivity it is important to ensure that we have appropriate management capability and good human resource development. There is no doubt we need to pursue information technology, production technology and biotechnology to enhance and add value to our natural capital. Importantly, we do need to ensure that we have quality and flexible workplace and employment relations and practices.
But wait moment! Aren’t we right now going through some serious changes to employment legislation, which has found general disfavour amongst the business community? What was reported to be tidy up of employment legislation through the Employment Relations Law Reform Bill has become major shift in legislation, overtly promoting collective agreement, multi-employer collective arrangements and unionism. Most business would agree that the legislation would work in opposition to good workplace and employment relations and practices. You can bet that consideration of this legislation is not on the agenda of the WPWG!
In addition, the OECD Economic Survey of New Zealand released in December 2003 has much to say about productivity and its importance to New Zealand. The OECD suggests that the Government should avoid measures that would reduce labour flexibility and raise labour costs. There is no doubt that the Employment Relations Law Reform Bill reduces labour flexibility and every likelihood that it will raise labour costs. No one minds paying employees more, providing productivity increases.
The OECD report also recommends that the Government should continue to remove regulatory obstacles to investment, particularly in the area of infrastructure by improving and speeding up the environmental consent processes. It rightly commends the Government, for putting appropriate emphasis on fostering innovation, skills and talent and developing global linkages, but it warns that the Government should be careful to maintain level playing field and avoid sector specific incentives.
The report also encourages the Government to improve the employment outcomes of marginal groups by strengthening incentives to move from welfare to work. Most importantly, the report said only through whole range of efforts to boost productivity growth and improve labour market outcomes, will New Zealand meet its income aspirations.
Let’s hope that the WPWG is given enough room to identify the real issues impacting on productivity, develop strategies for overcoming them and ensure that Government and industry then adopt them.
Of fundamental importance is need to shift the mind set of New Zealanders to ensure much clearer understanding of the linkage between sustainable business activity, increased productivity, economic growth, community well-being and individual welfare.

Peter Townsend is chief executive of Canterbury Employers’ Chamber of Commerce.

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