The latest national accounts suggest that over the March and June quarters of 2007 there has been a surge in market sector productivity growth (market output divided by hours worked in market sector). The ABS tells us this is the result of an increase in market sector output of about 2% and a DECLINE in hours worked of 0.5%.
Intuitively, this makes no sense. How could there have been a reduction of this order in hours worked in the market sector when there was a rise of 0.5% in hours worked in the economy as a whole in that same half year and of course strong employment growth and a fall in unemployment? Could all the increase in hours worked and employment over the six months to June have been confined solely to the non-market sector (health, education, government and perhaps property and business)?
If (as I suspect) the hours worked figures prove wrong and are revised, the labour productivity surge may well turn out to be a mirage. If the hours worked figures prove correct, it weakens Labors argument that national productivity growth is slowing down but it also weakens the Coalition’s argument that WorkChoices has stimulated labour demand as the figures would imply that WorkChoices (which is only marginally relevant to the government sector) is having a negative effect on labour demand in the market sector and a positive effect on productivity growth. Or maybe there are other forces at work. Its all very confusing. Any thoughts anyone?