A "grim" new report has outlined just how badly New Zealand has fared against other countries when it comes to productivity.
On average we work 2.3 hours more a week than people in other OECD countries, and produce 20 percent less, according to the Productivity Commission's new report, Productivity by the Numbers.
The biggest driver of economic growth here in Aotearoa is simply just more people working, accounting for about half the rise in GDP over the last few decades.
In 1870, we had one of the highest per-capita economic outputs in the world, the report shows - but have since fallen well behind Australia, Canada, Ireland, Korea and the United States.
"We don't stack up very well," Productivity Commission chair Ganesh Nana told Newshub. "One of the key numbers that really is a little bit grim is we're working longer than everybody else, but producing less. That's not great."
We work on average 34.2 hours a week, compared to the rest of the OECD's 31.9. For every hour, we produce on average $68 of output - 20 percent less than the average of $85.
"That's a pretty sobering thought that we're working harder but getting less for it," said Dr Nana.
"Think about what we could do with that," Milford Asset Management senior analyst Frances Sweetman told The AM Show.
"We could pay people more with it, pay more tax with it, we could fund more public services, we can invest it in technology and protecting the environment. It's meaningful."
Sweetman says it's partly because two of our biggest industries rely heavily on low-wage labour.
"Our economy has quite a high proportion of agriculture and tourism, and they are just simply less productive, more labour-intensive jobs. The productivity gains in agriculture have been quite impressive over the last 20 years, but can we make more productivity gains in the industries that we're already in?"
Dr Nana says innovation is key to increasing output without working harder.
"We had good examples last year of just how quickly we can change the way of doing things - whether that was working from home or working without having to contact people. We need to learn from that... rather than going back to normal, going back to pre-COVID ways of doing things, because the world has changed."
In the past, productivity has typically increased during times of upheaval and technological change - for example in the post-war era, and the 1990s as the internet made its way into workplaces.
While growth has slowed in most countries since the global financial crisis, including New Zealand, our performance in the decades before then was well behind most other OECD countries.
Looking at our hourly output and number of hours worked, we're closer to the likes of Turkey and Greece than we are Australia, Canada and the US. And despite working a similar number of hours a week, we only create half as much economic output as the Irish.
Workers in most high-output countries such as Germany, Sweden, Norway and Denmark, work 15 to 20 percent fewer hours than Kiwis.
Simply working harder isn't enough, says Sweetman.
"What has driven a lot of our productivity growth over the last decade or longer is working more, instead of working smarter. So actually, we are cracking the whip a lot more, but that does have wellbeing implications."
"It's not about people working longer or working harder - it's about working smarter," said Dr Nana. "I don't think it's just workers- it's all of us together, we've all got our role to play."
