Reaching our $305 billion
The EY Australian Productivity Pulse™
Where to from here?
Have companies reached their highest productivity peak, or will they keep on pushing towards the summit?
Despite corporate Australia, and some government departments and agencies, seeing incremental improvements through restructuring and cost cutting, Australia is yet to realise $305 billion1 in productivity potential.
Australian workers say they could be 21% more productive every day, if they could change just one or two things at work – representing unrealised productivity of more than $305 billion every year. This equates to an average of $26,300 per worker2. If just 5% of this potential was unleashed, the ASX200 could again approach, and perhaps exceed, the magical 6000 level last seen in 2007.
85% of workers could be more productive
Right across the workforce, four in five Australian workers (85%) could be more productive in their role. Workers said the main obstacles to increase their level of productivity were: poor staff management and a lack of motivation, reward and recognition in the workplace.
Without deliberate intervention from leaders across the Australian public and private sectors, Australia will take 20 years to achieve its full potential, assuming productivity continues to improve at the same rate it has over the past seven years. With intervention this potential could be halved.
Personal productivity plateaus; declines in some sectors
While the nation has made good progress in the productivity stakes during the past 18 months, with personal productivity growing steadily, it has plateaued since August 2012 - driven by declines in personal productivity in the financial services and resources sectors.
Organisations have worked hard to push the productivity levers of process efficiency and standardised systems. However, there remains little more to squeeze out of these initiatives. The back to basics approach of the last year has delivered some good gains, but now its returns are diminishing.
In the past six months, growth has tailed off in most sectors, and even fallen, with significant declines in the Mining, and Financial and Insurance Services industries. As a result, overall personal productivity has grown year on year, but plateaued since the last wave of The EY Australian Productivity Pulse™ (the Pulse) in August 2012.
No room for complacency
Australia has already felt the net productivity gains as a result of companies tightening the screws to adapt to changing market conditions. The challenge now lies in un-tapping our productivity potential, so we ensure business is sustainable into the medium-term.
As Wave 4 of the Pulse reveals, companies cannot afford to be complacent that productivity gains will continue. There are worrying signs that the stress of restructuring may be starting to reverse some of the productivity gains made during the last 12 months.
Growing divide between productive and unproductive workers
In addition, a negative shift in worker sentiment, caused by new and growing fears about job security, has created a growing divide between productive and unproductive workers. In particular, our least productive workers (the ‘Lost Souls’), who tend to be junior employees, are disengaged and wasting far more time at work than their productive colleagues – creating an ever widening gap. Unproductive workers now waste approximately 1 hr 30 mins per day more than productive workers – up from one hour just six months ago.
As Section 3 of this report explains, to sustain existing productivity gains and start unleashing the remaining potential, big organisations in both the private and public sectors need to review the effects of recent productivity actions and put in place new and bold initiatives that address all the levers of productivity improvement. Organisations need to get clarity around what constitutes genuinely competitive work, declare a war on waste and engage their workforces to motivate people to make a discretionary effort.
These efforts will require changes by:
At the same time, government needs to take a leadership role in promoting national productivity. As an employer of over 16% of the workforce, government needs to take ambitious steps to boost public sector productivity, including measuring and reporting annually on the performance of agencies at local, state and federal levels. It also needs to stop adding to the uncertainty that undermines business confidence and use policy levers to remove productivity hurdles in the rest of the economy.
Backed by proactive government support, companies that start pushing towards their productivity potential heights now, stand to gain significant advantage over those whose inertia keeps them stuck at their current level, or even sliding backwards. Without the new approaches outlined in this report, Australia is in danger of getting stuck far from the summit of our productivity potential.
- Section 1: State of play for the Australian workforce
- Section 2: Key take-outs for Boards, C-Suite and Managers
- Section 3: Path to the summit: unleashing productivity potential
1Based on ABS Australian National Accounts: National Income, Expenditure and Product March 2013 and Gross Domestic Product December 2012
2Based on ABS Australian National Accounts: National Employment figures March 2013