Monash University – ACER
CENTRE FOR THE ECONOMICS OF EDUCATION AND TRAINING
Industry-level measures of
productivity growth
Michael Long
14th National Conference
29 October 2010
Ascot House, Melbourne
Some topics
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Productivity measures
Australia’s productivity growth
Education and training
Service industries
Productivity growth by industry
Value-added dollar per hour by industry
o Builds on a project for Service Skills Australia
Productivity
o Central to our standard of living
o More output for fixed inputs
o Many influences:
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Quality of labour
Technology
Workforce strategies
Capacity utilisation
Economies of scale
Natural disasters
Government regulation
Changed inputs
Productivity measures
o Labour productivity
LP = VA / L or LP = (GO - I) / L
o Capital productivity
KP = VA / K or KP = (GO-I) / K
o Multifactor productivity (value added)
MFPVA = VA / (KL) or MFPVA = (GO-I) / (KL)
o Multifactor productivity (gross output)
MFPGO = GO / (IKL)
Sources
 National accounts
 Quarterly business indicators survey
 Labour force survey
 Price indices
 Industry measures
 Ad hoc surveys eg of hotel occupancy
Caveats
 Quality
 Intra-industry transfers
 The business cycle
 All the problems associated with GDP
Australia’s productivity growth
160
150
140
130
LP
120
CP
MFP (GVA)
110
100
90
80
85-90
89-94
94-99
99-04
04-09
Labour, Capital and Multifactor Productivity Indexes: Five year moving averages,
1985-90 . Adapted from ABS, Experimental estimates of industry multifactor
productivity, Australia: detailed productivity estimates. 1985-86 to 2008-09.
5260.0.55.002
Australia’s productivity growth
Years
86-90 90-95
95-00
00-05
05-06
06-07
07-08
08-09
Labour
1.52
2.12
3.06
2.24
2.14
1.07
1.54
-0.29
Capital
0.04 -0.26
0.20
-0.57
-2.17
-1.10
-1.95
-5.30
MFPGVA
0.89
1.83
0.95
0.08
0.02
-0.15
-2.74
1.12
Australia’s productivity growth
Slovak Rep.
Korea
Estonia
Czech Rep.
Slovenia
Iceland
Poland
Luxembourg
Finland
Israel
Japan
Greece
Austria
Hungary
Chile
UK
Ireland
USA
Sweden
Switzerland
Netherlands
Germany
France
Belgium
Portugal
Spain
Mexico
Canada
NZ
Australia
Italy
Denmark
Norway
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Average labour productivity growth by selected OECD countries, 2004 to 2008 OECD.Stat 24 May 2010.
Service industries
 Service industries are sometimes considered
the poor cousins in terms of productivity but
they are not all created equal
 Market and non-market
 Estimates available/not available
 Mozart’s string quintet in G Minor
 Travel, health, venues, media, digital
recordings.
Productivity and education & training
 Observation of association between education
levels and earnings & labour force participation
 More detailed statistical analyses linking
education to labour market outcomes
 Estimates of the more than satisfactory rates
of return to investment in education
 Growth accounting – over-time within and
between countries
 Self-sustaining growth theory
Productivity and education & training
Year
84-89
88-94
93-99
98-04
03-08
Output growth
4.4%
1.7%
4.5%
3.2%
3.6%
Capital services
38.1
59.0
38.6
48.0
70.8
Hours worked
38.6
-16.2
15.0
17.6
34.4
Labour composition
3.6
0.6
1.8
0.6
2.8
MFP
19.4
56.1
44.6
33.5
-8.1
% contribution
Labour productivity by industry
Agriculture
1.9%
Mining
-2.7%
Manufacturing
-2.2%
Utilities
-2.8%
Construction
0.1%
Wholesale
-2.5%
Retail
-1.8%
Accom & food
-1.8%
T'port & store
0.7%
Communication
-1.8%
Financial
0.3%
Arts & Rec’n
0.1%
Market
-1.3%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Annual change in labour productivity by industry, Australia 1998-99 to 2008-09
Adapted from ABS, Experimental estimates of industry multifactor productivity,
Australia: detailed productivity estimates. 1985-86 to 2008-09. 5260.0.55.002
5%
MFPVA productivity by industry
Agriculture
2.6%
Mining
-2.8%
Manufacturing
-0.1%
Utilities
-3.1%
Construction
0.3%
Wholesale
0.7%
Retail
1.1%
Accom & food
0.3%
T'port & store
1.2%
Communication
-0.2%
Financial
1.4%
Arts & Rec’n
0.6%
Market
0.2%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Annual change in MFPVA productivity by industry, Australia 1998-99 to 2008-09
Adapted from ABS, Experimental estimates of industry multifactor productivity,
Australia: detailed productivity estimates. 1985-86 to 2008-09. 5260.0.55.002
5%
$ value-added per hour by industry
Real estate
$446
Mining
$243
Utilities
$140
Banking, insurance
$117
Post & telecomm.
$70
MVF
$54
W'sale ex MVF
$54
Manufac.
$53
Pub. admin etc
$50
Renting nonRE
$49
T'port & storage
$43
Const'n
$39
Health & soc. work
$39
Agriculture
$36
Education
$35
Other services
$30
Hotels & rest.
$29
Retail ex MVF
$24
$0
$100
$200
$300
$400
Dollars of value-added output per hour of labour by industry, Australia 2007
www.euklems.net.
$500
Thank you
 and also
www.education.monash.edu.au/centres/ceet