New Zealand workers are working about 15 percent longer than their counterparts in other developed countries, but producing about 20 percent less output per hour worked, according to a new research paper from the government's Productivity Commission.
In a comparison with other nations in the OECD ( the Organisation for Economic Cooperation and Development), the paper said New Zealand had been very successful at increasing participation in the labor market and employment growth had been among the strongest in the OECD from the mid 1990s.
However, the country's labor productivity ranked in the lower third of OECD countries and was similar to that in Slovenia, Israel and the Slovak Republic.
"It is because of this poor labour productivity performance that GDP and average incomes per person are low in New Zealand," said a summary of the paper.
In a comparison with neighboring Australia, it said both countries had remarkably similar employment growth since the mid- 1950s, but Australian companies had been much more successful than New Zealand counterparts in converting labor input into output.
"In other words, labor productivity in Australia has grown considerably faster than in New Zealand over a long period of time. This has been a key driver of the increasing income disparity across the two trans-Tasman economies," said the summary.
While differences in industry mix explained a sizeable share of the trans-Tasman productivity gap, with Australia having a greater share of employment in high-productivity industries, even within the same industries, New Zealand's productivity lagged behind Australia.
"Indeed, across a broader set of countries, the available evidence indicates that the productivity performance of most New Zealand industries does not compare well internationally."
The paper made no recommendations to redress the "poor" productivity, but it said the research "underscores the need for New Zealand's policy environment to be strongly supportive of productivity growth and for firms to have a clear focus on improving productivity."