Australia must reverse its recent decline in labour productivity growth. Productive time achieved (“time on tools”) is consistently lower than in other countries for several reasons, including regulatory rigidities and shortages of skilled first-line supervisors and engineers.
Overall productivity in the broader resources sector will improve as projects now under construction start production. But low rates of productivity growth in the crucial construction sector will not automatically recover and must be reformed. High labour costs and lower labour productivity mean construction work in Australia can cost up to five times than on the US Gulf Coast. Construction costs per installed tonne of capacity are among the world’s highest.
Policies must encourage:
- Reforming labour market regulation to encourage greater flexibility and more productive employer-employee relationships
- Continued access to overseas labour markets for shortages of skilled workers (including through 457 visas)
- Greater mobility of workers to regional areas of Australia where demand is greatest (including FIFO arrangements, particularly through the construction period)
- Investment in training.