Closing the $2.4 billion public sector productivity gap

The EY Australian Productivity Pulse™

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About the Pulse

The EY Australian Productivity Pulse™ measures Australian workers’ views about their organisation’s and their own productivity. Based on a survey of approximately 2,100 employees spanning seven industries and from all levels within organisations, it includes workers from both the private and public sectors. This particular Pulse included a larger sample of public sector workers.

Two years ago, Wave 1 found Australian workers wasting 18% of their day on work that didn’t add value – costing the economy an estimated $109 billion. Eighteen months ago, Wave 2, profiled four groups of workers, from “highly productive” to “unproductive”, with each group identifiable through a number of characteristics. Last year, Wave 3 revealed how the more productive groups were driving an upturn in productivity. Six months ago, Wave 4 examined Australia’s productivity potential – its context, causes and characteristics – and how to unleash it.

In Wave 5, we turn our attention to the discrepancies between public and private sector. In addition to an update on national productivity levels, we ask:

How can the public sector close its $2.4 billion productivity gap?

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It appears there is something fundamentally wrong with the business models, practices and policies of government organisations. Australian public sector productivity is lagging the private sector costing Australian taxpayers $2.4 billion1. It’s time for the public sector to improve its productivity and close the gap. Ambitious reforms are needed, requiring fundamental change in organisational models and practices.

Although personal productivity continues to increase at a national level, a significant ‘productivity potential’ exists within the public sector.

Wave 5 of The EY Australian Productivity Pulse™ (the Pulse) found only 20% of public sector workers believe they are operating at or above their lifetime best, compared with 29% of private sector workers, despite sharing comparable skills, capabilities and remuneration. Closing this gap would result in a $2.4 billion productivity dividend to Australia.

Australia’s workers believe improving productivity in the public sector is more important than in the private sector. This is felt most strongly in Queensland, which has experienced the nation’s most extensive public sector cuts in recent years.

The public sector environment is not yielding workers who consider themselves highly productive. This is not about the quality of people working in the public sector workforce, who are frequently equal to those found in the private sector. Nor is it about remuneration, which is comparable in the public sector. It can only be concluded that public sector workers are being held back by the government organisations themselves.

About The Pulse

1 Source: ABS Employment data of Federal, State and Local agencies 2012; ABS National Account 2012; EY team analysis.