Productivity and Skills. John Menadue

Mar 14, 2013

For months, the Business Council of Australia and senior business executives have been banging on about the need to increase labour productivity. To achieve this, they have emphasised the need to amend the industrial relations legislation, ‘Fair Work Australia’ as essential to lift productivity. Many have seen it as an attempt by employers to rebalance the industrial relations framework in their favour and has little to do with productivity. Others would see it as political identification with the Coalition

But this campaign by employers was not based on fact. Ross Gittins in the SMH 11 March 2013 has drawn attention to the most recent national accounts which showed that ‘Labour productivity in the market sector … (has) been improving at the rate of 0.5% or better for the last seven quarters … That represents an annualised rate of 2% a year … which compares with an average rate of 1.8% over the past 40 years.’

The ABS has also released figures that show that labour productivity had improved 3.5 % in 2012 compared with 0.9% in 2011. The strong dollar appears to have forced many businesses to restructure and increase productivity in order to overcome rising costs

More has to be done to lift productivity, but recent performance has not been too bad. Hopefully our major companies who spent so recklessly in the mining boom will continue to improve productivity by expanding output and reducing costs – starting with executive salaries. Marius Kloppers, the terminated CEO of BHP received a $75 m exit package!

I have also spoken recently about the failure of Australian business executives to skill themselves and their companies for our future in Asia. At the most, there would be a handful of chairpersons or CEOs of any of our major companies who can fluently speak any of the key Asian languages. This failure is stark. It is obviously too late for them now, but it is not at all clear that they are recruiting executives for the future with the necessary skills for Asia. A recent survey by The Business Alliance for Asian Literacy, representing over 400,000 businesses in Australia, found that ‘more than half of Australian businesses operating in Asia had little board and senior management experience of Asia and/or Asian skills or languages.’

Senior Australian business executives speak correctly about the need to upskill the Australian workforce. But they should start by setting an example by up skilling themselves.

John Menadue

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