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Mining is Making Aussies Lazy

Interesting post from the MacroBusiness blog: looks like the widely reported cringe about Australia’s workplace productivity declining is far too overblown. To quote:

In his speech Dr Parkinson quoted figures showing that Australia’s annual productivity growth slipped from 2.1 per cent in the 1990s to 1.5 per cent in the 2000s. It is far more illuminating, however, to describe the productivity performance of the non-mining and mining sectors of the economy separately. This can be done by removing both mining output and the hours worked in the mining industry from the national figures and analysing the residual.

When such an adjustment is made productivity growth actually increases from the 2.1 per cent cited by Dr Parkinson to 2.4 per cent in the 2000s in the non-mining sectors of the economy.Figure 2 provides a comparison of the trend in productivity in the mining and non-mining industries over the period 1995 -2010.

The results of this disaggregation make clear that the existing industrial relations and wage setting arrangements in Australia are not acting as an impediment to productivity growth. The measured decline in average labour productivity is being caused by the unprecedented haste with which Australia’s mineral resources are being extracted. That is, high commodity prices are encouraging mining companies to exploit mineral deposits that require more energy, more capital and more labour to extract an additional tonne of output.

In the meantime, the headline is being reported as a crisis for Labor’s Fair Work IR laws, when it’s really just the result of an industry growing at a bonkers rate.

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