Centre for the Economics of Education and Tra in in g
Fac u l t y o f E d u c a t i o n, Mon a sh Un iversit y
in the australian transport and logistics industries
JUNE 2013
Report prepared for TLISC by Michael Long & Chandra Shah, CEET
TLISC
CEET
The Transport and Logistics Industry Skills Council Ltd
(TLISC) is an independent, government funded, not-forprofit organisation that works on behalf of the Transport
and Logistics Industry to promote investment in skills and
workforce development.
CEET is the only centre for the economics of education and
training in Australia. CEET focuses on the contribution of
education and training to economic and social development,
undertaking research training, consultancies and
dissemination of the economics and finance of education
and training. It has extensive experience and expertise
in: the finance and economics of education and training;
analysis of large data sets; policy development; supply and
demand analysis; and working with government authorities
in Australia and overseas.
TLISC is chartered with driving the skills and workforce
development agenda across the entire Transport and
Logistics industry which encompasses activities in
road transport, warehousing, rail, aviation, maritime,
logistics and ports.
CONTENTS
Executive summary
1
Tables and figures
51
References
52
1
Introduction
2
Productivity 3
3
Productivity growth in
Australia
15
3.1 Output23
9
3.2
Hours of work 24
3.3 Capital services
25
3.4
Productivity growth 25
4
International comparisons
5
Industry comparisons
27
33
5.1 35
The TLISC and the transport industry
5.2
The transport &
41
Industry, productivity
and productivity
growth
5.3 Transport, 47
productivity
and productivity
growth in other
countries
Executive
summary
While policy-makers grapple with the
dynamics of an Australian economy
in transition, there is unanimous
agreement that increased productivity
is a key factor in supporting the
country’s future prosperity. The
Transport and Logistics Industry Skills
Council (TLISC) recently commissioned
Monash University’s Centre for
Economics, Education and Training
(CEET) to undertake an assessment of
the productivity climate specifically in
the transport and logistics Industry.
The research report provides TLISC
with a window into the current trends
in productivity growth and assists in
the targeting of training needs to meet
future demand.
Although productivity figures have been on the decline
over the past 15 years, Transport and Logistics sectors are
still out-performing other industries and are experiencing
above average growth rates.
A great sign for the industry is its above-average gross
value added hourly rate of $69. This means an hour’s work
in the Transport and Logistics industry is 6.1 per cent more
productive than the average hourly rate of the Australian
economy at $65.
Assessing productivity has its challenges, as for many
countries and industries productivity growth is cyclical.
Hence different economies can be at different stages of the
productivity cycle, making specific comparisons difficult.
Robert Adams
Chief Executive Officer
Taking this into account, Australia’s Transport and Logistics
industry has been a strong performer. Between 1983 and
2007, productivity growth in the Transport and Logistics
sectors was generally higher than productivity growth in
the whole economy for most countries for most periods.
When measuring productivity growth there are a number
of factors that influence economic growth. Innovations
in technology or technique and their diffusion and
adoption are perhaps the most commonly perceived
source of productivity growth. But it is important not to
overlook other areas that offer real measures of improved
productivity, like the quality of the workforce.
A more skilled workforce in many circumstances can
produce more than a less skilled workforce allowing for
the costs of training and possibly higher salaries.
Although it is clear our economy is in a state of transition,
there is a bright future for the Transport and Logistics
industry. As the economy shifts away from manufacturing
towards service industries, the investment Transport and
Logistics has placed in up-skilling its workforce will put
the industry in a strong position to take full advantage
of Australia’s ever-changing economy.
EXECUTIVE SUMMARY
Key points
The Australian Transport & Industry
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The Australian economy
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Growth in productivity of all types has declined
recently to historically low and sometimes negative
levels over about 15 years.
Improvements in education and training play an
important role in productivity, productivity growth and
hence economic growth.
Levels of absolute total factor productivity are
comparable with the USA, Canada, Western Europe
and Japan—productivity and productivity growth are
not the same as international competitiveness.
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While the TLISC training packages focus on jobs in
the Transport Industry, the correspondence between
TLISC-relevant occupations and the Transport,
Postal and Warehousing industry category is only
approximate.
An hour’s work produced about $69 in gross value
added in 2011, which places the industry just above
the average for the Australian economy ($64 per
hour).
Over the last 25 years or so,
- labour productivity has grown only slightly slower
than in the market economy (2.1 per cent compared
with 2.3 per cent per year). Labour productivity
growth has been slowing in recent productivity
cycles—0.4 per cent per year in the most recent
productivity cycle is the lowest of the five cycles
from the mid-1980s.
Labour productivity growth ranks a little below the
middle of a group of 35 mostly OECD countries and
has fallen only very slightly compared with other
countries over the last two decades. The small relative
decline in Australia’s labour productivity growth is
partly because labour productivity growth has also
declined in many other countries.
- capital productivity growth has declined less
in the Transport & Logistics industry than in the
market economy overall.
Multifactor labour productivity growth is at the lower
end of a group of 15 mostly OECD countries and has
fallen compared with other countries over the last
decade. Growth in multifactor productivity has also
declined internationally over the last decade.
- multifactor productivity has grown faster than in the
overall market economy—1.2 per cent compared
with 0.9 per cent per year. Nevertheless, absolute
and relative multifactor productivity growth have
declined sharply during the current productivity
cycle, falling to minus 1.1 per cent per year, well
below the long-term average of plus 1.2 per cent.
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Productivity changes contributed only slightly to
the national decline in market MFP growth in the
second half of the 2000s.
Between 1983 and 2007 average productivity growth
has been lower than the average productivity growth
in the Transport & Logistics industries of a number of
mostly OECD countries for which data were available.
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productivity
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2
This report provides Transport and Logistics Industry Skills Council (TLISC) with
a discussion on various aspects of productivity growth in the Transport and
Logistics industry in Australia.
Productivity, productivity
growth and the Transport &
Logistics industry
TLISC training packages focus on jobs in the Transport
& Logistics industry, but the correspondence between
TLISC occupations and the transport industry is less
than perfect. Similarly, the training for some jobs in the
transport industry is within the scope of other Industry
Skills Councils (ISCs). Hence estimates of productivity
and productivity growth for the ABS ANZSIC industry
category of Transport, Postal and Warehousing have
only an approximate correspondence to the scope
of the TLISC.
An hour’s work in the Transport, Postal and
Warehousing industry produced about $69 in gross
value added in 2011, which places the industry just
above the average for the Australian economy ($64 per
hour). Over the last 25 years or so, in this industry:
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Gross value added has grown at about the same rate
as the overall market economy—but over the last
decade has grown more quickly.
Hours of work have grown more than for the market
economy overall, especially during the last decade.
Productive capital has grown more slowly than the
overall market economy, but again the recent rate
of increase has been higher, increasing from 3.7 per
cent, 2.4 per cent and 2.2 per cent per year for the
first three productivity cycles to 1998-99 and then
approximately doubling to 4.1 per cent, 6.3 per cent
and 4.8 per cent for the more recent cycles to be
close to the average for the market economy.
Labour productivity has grown only slightly slower
than in the market economy (2.1 per cent compared
with 2.3 per cent per year). Labour productivity growth
has been slowing in recent productivity cycles-0.4 per
cent per year in the most recent productivity cycle is
the lowest of the five cycles from the mid-1980s.
Capital productivity growth has declined less than in
the market economy. Only Agriculture and Finance,
with growth of 2.8 per cent and 0.7 per cent per year
respectively, had better performance in growth of
capital productivity.
Multifactor productivity has grown faster than in the
overall market economy-1.2 per cent compared with
0.9 per cent per year. Nevertheless, absolute and
relative MFP growth has declined sharply during the
current productivity cycle, falling to minus 1.1 per cent
per year, well below the long-term average of plus 1.2
per cent.
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Contributed only slightly to the overall decline
in market MFP growth in the second half of the
2000s.
Despite the overall negative trend, some industries
continue to improve their rate of MFP growth and/
or experience positive growth—Agriculture, Retail,
Rental, Hiring and Real Estate industry—while others
are at least stable—Construction and Information
Technology.
Comparing the productivity growth of Transport,
Postal and Warehousing industries in Australia
with the same sector in other countries is difficult.
Countries have different mixes of modes of
transport—road, rail, sea and air—which in turn
reflect their different geographies, population
distributions and densities and trade patterns, as well
as the relative importance of Transport and Storage
for the overall economy.
Between 1983 and 2007, in this industry:
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Average productivity growth was generally higher
than productivity growth in the whole economy for
most countries for most periods.
Average productivity growth in Australia has been
lower than in other mostly OECD countries for
which data were available.
The paper is based on the Australian Bureau of
Statistics (ABS) National Accounts collection, the
associated publications and estimates of productivity
growth and especially the estimates of industry
productivity growth (ABS 2012b; 2012c). Other data
sources, such as the OECD and KLEMS collections,
also ultimately rely on information about Australia
supplied by the ABS.
The paper begins with a brief discussion of the
concept of productivity and productivity growth,
before examining growth in output, inputs and
productivity in Australia and productivity and
productivity growth in other countries. It then
examines the relationship between the scope of
TLISC and the Transport, Postal and Warehousing
industry division—the ABS industry category
that most closely relates to the scope of TLISC
and for which separate productivity growth
estimates are available. The report then examines
estimates of productivity and productivity growth in
the Transport & Logistics industry in Australia and in
other countries.
1 | introduction
What is productivity?
Productivity is the relationship between real physical
inputs and real physical output. Productivity increases if
more outputs can be produced using the same physical
inputs. Most of the discussion about productivity is
about changes in productivity over time or productivity
growth. It is less commonly about absolute levels of
productivity.
Influences on productivity growth include:
Productivity growth is more often discussed in the
context of whole economies or industries within
economies. For firms, it should not be confused with
profitability—the reward of productivity growth for firms
can be simply survival.
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the availability of finance
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capacity utilisation
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economies of scale
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natural events
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Several types of productivity growth are commonly
identified, including:
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labour productivity
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capital productivity
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multifactor productivity-gross value added (MFPgva)
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total factor productivity (TFP).
Measured productivity growth is the residual or what
is left over after changes in inputs (labour, capital, and
whatever else) have been used to explain changes in
output. For instance, if labour and capital inputs both
increase by 10 per cent but output increases by 12
per cent, then the difference is considered increase in
productivity, assuming no other inputs have changed.
innovations in technology or technique and their
diffusion and adoption
changes in the quality of the workforce
changes in workforce strategies—policies designed
to motivate, better deploy and retain staff
government regulations—too little, too much or the
wrong type
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incentives for innovation
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social stability.
Disentangling the individual contributions to productivity
growth of these various influences is difficult.
Productivity growth is cyclical—hence comparisons
of productivity growth should be made between
averages across productivity cycles and caveats should
be placed on comparisons across industries and
particularly countries. Estimates of productivity growth
can vary substantially from year to year and therefore
it is important not to emphasise an estimate for a
single year.
Productivity
Productivity
andand
productivity
productivity
growth
growth
in the
in the
Australian
Australian
transport
transportand
andlogistics
logisticsindustries
industries
6
Productivity growth in Australia
In Australia, productivity growth of all types has declined in
recent years to historically low and sometimes negative levels
and has been a cause of concern. The Australian economy,
however, has continued to grow and growth of output has
outpaced population growth.
There is only modest agreement about the causes of the
decline in productivity growth. Some of the causes include:
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a natural decline from the high levels of growth during
the 1990s
the restructuring of the Australian economy:
the long-term shift of production in advanced economies
such as Australia away from manufacturing and towards
service industries
disruptive economy-wide changes in the allocation
of capital and labour associated with the record terms
of trade
the effect of particular industries, especially the decline
in productivity growth in the mining industry
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shortages of suitably skilled labour
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inadequate (often transport-related) infrastructure
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lower levels of research and development and technical
innovation and adoption
a slowdown in microeconomic reform.
The 2011-12 National Accounts contains indications that
labour productivity growth (as measured by gross value
added per hour of work) may have returned to levels not
seen since 2004 and comparable with levels prevailing in the
mid and late 1990s. The more detailed estimates used in this
report were available only until 2010–11 and hence these
indications, despite being for only one year, are a major caveat
on some of the results and commentary presented here.
Productivity growth is a major influence on economic growth,
along with:
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more people working more, including:
- a higher proportion of the population in the workforce
- each worker working more hours per year
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increases in the amount of capital per worker
(or hour of work) increases.
The contribution of productivity growth to output
growth has been declining over the last decade
and a half. The decline in the growth of multifactor
productivity has had a substantial impact on output
(and on living standards). High levels of investment
and increasing the capital labour ratio have been
important drivers of economic growth and improving
living standards in Australia. The value of the
productive capacity of capital, or capital services,
has been increasing at a faster rate than labour (5.2
per cent compared with 1.5 per cent) over the period
1995 to 2011.
While population grew at an average of 1.3 per cent
per annum from 1995, hours of work grew slightly
more quickly at an average rate of 1.5 per cent. This
reflects shifts in the age profile, increased workforce
participation and the rise of part-time employment.
Quality adjusted hours of work (2.0 per cent per
year) has grown more strongly than unadjusted
hours (1.5 per cent) since 1995, reflecting higher
levels of investment in education.
Improvements in education and training play an
important role in economic growth. Direct measures
of the number of hours worked do not recognise
changes in the skills composition of the workforce—
an hour’s work from a brain surgeon is treated as
equal to an hour’s work from a cleaner. The effect
of skilling the workforce on growth in output is
between 0.2 per cent and 0.3 per cent over the last
two decades. If this positive effect is removed, the
remaining component of multifactor productivity
growth is smaller or more likely to be negative.
The very high terms of trade (the relative prices
of exports and imports) over the last decade
have contributed substantially to higher living
standards quite apart from any growth in output—
by one estimate, these changes were sufficient
to lift national income by 12 per cent to 15 per
cent beyond what it would otherwise have been.
Productivity growth will become that much more
important when other influences on living standards
become less benign.
1 | introduction
International comparisons
It is often difficult to make meaningful international
comparisons of economic and other activities
because of institutional and cultural differences
between countries. Comparisons of productivity and
productivity growth among countries are confounded
by differences in prices as well as differences in
the mixes of production and consumption among
countries and differences in quality.
Australia has total factor productivity levels
comparable with the USA, Canada, Western Europe
and Japan. In terms of absolute productivity (not
necessarily productivity growth), there is a close
grouping of the USA, Canada, Western Europe,
Japan and Oceania (dominated by Australia), with
other parts of the world having substantially lower
levels of productivity.
Just as for individual firms there is a substantial difference
between productivity and profitability, productivity and
international competitiveness are not the same for
all countries.
Australia’s labour productivity growth ranks a little below
the middle of a group of 35 mostly OECD countries
and has fallen only very slightly compared with other
countries over the last two decades. The small relative
decline in Australia’s labour productivity growth is partly
because labour productivity growth has declined in many
other countries.
Australia’s multifactor labour productivity growth is at
the lower end of a group of 15 mostly OECD countries
and has fallen compared with other countries over the
last decade. Over the last decade, growth in MFP has
declined internationally.
Productivity and productivity growth in the Australian transport and logistics industries
8
Productivity is the relationship between real physical inputs and real physical
output. To the extent that more outputs can be produced using the same physical
inputs, productivity is higher. The idea is closely related to notions of efficiency,
using the same or fewer resources to produce more output.
Productivity
Productivity
andand
productivity
productivity
growth
growth
in the
in the
Australian
Australian
transport
transportand
andlogistics
logisticsindustries
industries
2
Productivity
Productivity (and efficiency)
is more easily understood at
the level of individual economic
activities within particular firms
and sometimes industries.
Examples of changes in the Transport and Logistics
industries that have improved productivity include:
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better fuel efficiency of cars, trucks,
aircraft and ships
containerisation of cargo which has reduced the time
ships spend in port
more rapid movement of containers between storage
and transport or between modes of transport
computerised tracking of deliveries, better
communications between delivery vehicles
and despatchers.
It is possible to calculate the savings associated with
these and other innovations, compare them with the
costs and determine whether goods and services can
be (or have been) delivered at a lower cost. These
calculations become more difficult when the estimates
of productivity growth are for the whole economy or
for many changes in a particular industry and prices
change over time. Despite the emphasis on real physical
inputs and outputs, many aggregate estimates of
productivity require calculations that measure input and
outputs in monetary terms as the only basis on which
the different physical inputs and outputs can be equated.
2 | productivity
These values are converted to constant basic prices
using price indexes that correct for shifts in relative
prices over time and these, in turn, generate indexes
that attempt to measure volumes of inputs and outputs
rather than their value. These considerations gradually
move the meaning of productivity away from the concrete
experience of producing goods and services to more
abstract aggregates that seem unrelated to particular
changes or innovation.
Most of the discussion about productivity is about
changes in productivity over time or productivity growth.
It is less commonly about absolute levels of productivity.
Changes in productivity over time are relative changes
and their discussion need not necessarily relate to
absolute levels of productivity. If it were observed, for
instance, that Transport, Postal and Warehousing in
Australia had a higher rate of productivity growth than,
say Mining, this says nothing about absolute levels of
productivity in the two industries.
Productivity growth is not the same as growth in
profitability. In a market economy, an early adopter of
an efficient innovation might generate some short-term
gain in profitability—and in some cases these short term
advantages might be leveraged into market dominance
and improved profitability, especially with the protection
of patents and copyright. In general, however, the benefit
to an organisation from adopting more efficient or
productive practices is survival. In the absence of barriers
to competition, an organisation that does not adopt
more productive techniques will go out of business as
they cannot compete against other organisations that do
adopt them.
Economists routinely distinguish several types of
productivity growth. The ABS’s Experimental estimates of
multifactor productivity are for four of the more commonly
used measures:
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labour productivity (LP)—the gross value added (GVA)
(the difference between value of outputs and the
value of inputs) per unit of labour (measured as total
hours worked)
capital productivity (CP)—the GVA per unit of capital
(measured by capital services, which reflects the
economic capacity of the capital stock of an industry or
the economy)
multifactor productivity-gross value added (MFPgva)—
the GVA per unit of an index that combines the
labour and capital indexes using their respective
income shares
multifactor productivity-gross output (MFPgo)—a
measure similar to MFPgva, but in which the algebraic
combination of the terms is different.
For brevity, this report focuses on only the first three1.
Other sources refer to total factor productivity (TFP)
where changes in output are related to changes in other
factors as well as labour and capital. It is not always
clear how many additional factors are required before
1
Productivity g
rowth is not
the same as g
rowth
in profitability
.
MFP becomes TFP. Some ABS estimates of MFP
also remove the effect of changes in the quality of
labour—its education and experience. The scope
of aggregate productivity growth estimates can
also range from the whole economy, to the market
economy and to particular industries.
The elements that contribute to the ABS industry
measures of productivity growth are based on data
drawn from the ABS’s statistical survey program
as well as government administrative collections—
mostly the same as those that underpin the
construction of the National Accounts, although
industry estimates variously draw on additional
ABS collections.
Labour productivity and (the less frequently
used) capital productivity are partial measures of
productivity growth that link changes to output to
only one factor of production—labour or capital. For
instance, labour productivity can increase due to
either increases in the capital services used per hour
of labour (capital deepening) or real improvements
The trends for value-added and gross output multifactor productivity are mostly similar. Although it is arguable that gross output measures are technically superior, industrylevel value-added MFP measures are more closely aligned with, and easier to calculate from, national accounts. And, for the moment at least, estimates of MFPVA for a
given year are available nearly 12 months earlier than the corresponding MFPGO estimates.
Productivity and productivity growth in the Australian transport and logistics industries
12
Labour Productivity
Capital Productivity
Multifactor Productivity
in the efficiency of labour. It is a widely used measure
of productivity, partly because it is closely related
to changes in living standards. Increases in labour
productivity, given constant workforce participation and
some other caveats discussed earlier, usually translates
into increased GDP per capita.
Multifactor productivity measures the output relative to
the inputs of both capital and labour. It is therefore a
more complete measure than labour productivity and
more closely related to economic growth. MFPgva can
be expressed as (GO-I)/KL where (GO-I) is Outputs (O)
minus Intermediate Inputs (I) or Gross Value Added (GVA)
and KL is a combined measure of Capital and Labour
inputs.
Productivity growth is a black box. Productivity growth
is the residual—it is what is left over after changes in
inputs (labour, capital, and whatever else) have been used
to explain changes in output. For example, if labour and
capital inputs both increase by 10 per cent but output
increases by say 12 per cent, the difference between
the expected increase in output (10 per cent) and the
actual increase in output (12 per cent) is attributed to an
improvement in productivity. In this sense, productivity is
not measured directly.
Because productivity is a residual, or left over, term, it
includes any errors in the measurement of changes in
labour, capital and any other input. For instance, if labour
and capital inputs are perfectly measured and perfectly
explain changes in output, then productivity growth
is zero. If, however, labour and capital inputs are not
perfectly measured, then estimated productivity growth is
no longer zero. And the complexity of measuring changes
in output and labour and capital inputs means that there
is almost certainly some measurement error.
The black box of productivity growth includes a large
number of possible influences on economic growth.
Innovations in technology or technique and their diffusion
and adoption are perhaps the most commonly perceived
source of productivity growth. Other possible sources of
productivity growth include:
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The quality of the workforce—a more skilled workforce
in many circumstances can produce more than a less
skilled workforce allowing for the costs of training and
possibly higher salaries. Similarly a healthier population
and workforce can be more productive.
Workforce strategies—policies designed to
motivate, better deploy and retain staff and
can improve productivity.
The availability of finance for investment—finance
availability can be influenced by the savings ratio
in the economy and the expected profitability of
investment. It influences the rate at which innovations
can be adopted and obsolete processes and
equipment replaced.
Capacity utilisation—if plant can be used for three
shifts a day instead of two, the same semi-fixed capital
and land can be used to produce more output. On
the other hand, if shortages emerge due to productive
resources being fully employed, productivity can also
be negatively affected.
Economies of scale—applying the same production
processes and approaches can often be more
effectively implemented on a larger scale if there are
any fixed or partially fixed costs.
Natural events—fires, floods, hurricanes and droughts
can reduce output given the same relative inputs of
labour, capital and intermediate goods. The effect is
not restricted to agriculture. In recent years, output
from the mining industry, for instance, has been
severely affected by floods. Most inputs, however,
need to be maintained. Productivity in the road, rail and
possibly to a lesser extent, flight and shipping transport
industries has been affected as infrastructure has been
destroyed by flood and hurricanes.
Government regulation—too little, too much or the
wrong type of regulation can reduce productivity.
Incentives for innovation—the level of competition in
markets, patent and copyright protection, tax rates,
and so on.
14
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Disentangling the contributions
of the many influences on
productivity growth is difficult
Economists usually struggle to allocate output growth
to three or four sources—changes in capital, changes in
labour and changes in the quality of labour. Identifying
the effects of narrower influences on productivity growth
is challenging.
Social stability—war, crime, corruption and other
forms of social disruption can reduce productivity. For
instance, to the extent that, say, Qantas directly pays
for additional security in response to terrorism threats,
its productivity is reduced because it costs more to fly
a person from A to B.
The considerable number of influences on productivity
Productivity growth is cyclical
is a feature that should reduce volatility—as an average
Some of these influences on productivity growth are
related to the business cycle—economies of scale,
capacity utilisation and shortages, savings ratios, for
instance. Productivity growth itself can be cyclical,
which makes estimating trends in productivity growth
difficult. Hence the recommendation that comparison
of productivity growth is made between averages
across productivity cycles. If making comparisons of
productivity growth over time within a country is difficult,
making comparisons between industries or at a point in
time between countries is even more fraught—countries
may well be at different stages of their productivity cycle.
of all these effects, productivity growth should be
Year-on-year estimates of
productivity growth are volatile
Graphs of productivity growth over time often show
considerable variation from year-to-year—trends in
productivity growth are a long way from smooth and
consistent. As with much economic data, it is common
to average values across several years to provide a more
stable picture of changes in productivity and it would
be unadvisable to attach too much importance to a
single estimate.
protected from undue volatility. While some of these
influences are very volatile—weather effects, for
instance—others are more dependent on institutional
and legal frameworks that are mostly little changed
from year-to year. The level of volatility of estimates of
productivity change may be a little surprising.
It is also important to distinguish between the more
systematic or planned influences on productivity
and productivity growth that have a once-off effect
and those that are more sustainable or on-going. For
instance, creating greater flexibility in labour relations,
zoning regulations and removing red tape might reduce
costs and stimulate productivity on a once-off basis.
It has been argued, for instance, that this was the
basis for the surge in productivity growth experienced
in Australia during the 1990s. Regulating for an open
competitive market economy in which it pays to
innovate (or to rapidly adopt innovations) and costs
not to innovate, however, is more likely to produce
on-going, sustainable innovation and productivity
growth (Ahn 2002). Similarly, it is argued that lifting the
level of human capital, mostly through higher levels of
education and training, can contribute to sustainable
economic growth through its effect on innovation.
Productivity and productivity growth in the Australian transport and logistics industries
16
Productivity growth in Australia has declined recently to historically low and
sometimes negative levels.
3
Productivity
growth in
Australia
Figure 1 and Table 1 show the
annual growth in three types
of productivity in Australia for
the years 1996 to 2011.
The key features are:
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Productivity growth of all types has been declining
in Australia over the last 15 years—MFPgva averaged
1.4 per cent, 0.7 per cent and -0.6 per cent for the five
year periods 1997
-2001, 2002-2006 and 2007-2011 respectively.
Growth for multifactor productivity lies between the
growth of labour and capital productivity.
Growth in labour productivity has been higher than
growth in capital productivity throughout the period,
a feature that is associated with capital deepening
—relatively more capital than labour is being employed
in the production process.
Growth in capital productivity has been negative
throughout most of the last decade. This does not
mean that it is not profitable to invest. Profitability
(and expected profitability) of investment are reflected
in the relatively high levels of investment.
Growth in multifactor productivity has been negative
for much of the last decade. The additional resources
used in production (more hours worked, more capital)
have not produced the same level of increase in output.
It undermines economic growth.
3 | productivity growth in australia
Table 1
Annual productivity growth in the market economy, Australia, 1995-2011 (%)
Year ending June
'96/'97
'98/'99
'00/'01
'02/'03
'04/'05
'06/'07
2008
2009
2010
2011
Mean
Labour
3.3
4.0
1.7
3.0
1.8
1.4
1.2
0.6
2.7
-0.3
2.1
Capital
-0.1
0.2
-2.2
-0.4
-1.7
-2.7
-3.0
-4.9
-2.2
-2.5
-1.5
MFPgva
1.9
2.4
0.0
1.6
0.3
-0.4
-0.6
-1.9
0.4
-1.3
0.5
Based on data from ABS (2012b), Table 13. MFPgva is gross value added multifactor productivity. Years are years ending in June.
Values in columns with headings such as ‘96/’97 are the average of the values for 1996 and 1997.
Figure 1
Annual productivity growth in the market economy, Australia, 1995-2011 (%)
6
Annual productivity growth (%)
4
2
0
-2
Labour
Capital
MFPgva
-4
-6
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
‘06
YEAR
Based on data from ABS (2012c; 2012b). Table 15. Gross output based MFP indexes and ABS, Australian system of national
accounts, 5204.0, Table 13, Productivity in the market sector. MFPgva is gross value added multifactor productivity.
‘07
‘08
‘09
‘10
‘11
18
take into account quality improvements. While these
influences may be important, it is unlikely that they
could explain more than a small part of the decline.
The recent decline in the rate
of productivity growth has been
a cause of concern.
®®
For instance, the 2010 inquiry, Raising the Level
of Productivity Growth in the Australian Economy,
by the House of Representatives Standing Committee
recommended that:
- The long-term shift of production in advanced
economies such as Australia away from
manufacturing and towards service industries
is sometimes assumed to provide a brake on
productivity growth because some service industries
are labour intensive with little apparent scope
for improved methods of service delivery2. Some
service industries, however, have shown reasonable
productivity growth and in any case the rapid
recent substantial decline in productivity exceeds
anything that could be explained by the secular and
somewhat glacial shift towards the service industries.
Achieving MFP growth rates above Australia’s long-term
average of 1.1 per cent is a critical long-term national
goal. The committee supports the adoption of a national
productivity growth target for the market-sector. This will
ensure productivity remains a key consideration in relevant
policy development. (House of Representatives Standing
Committee on Economics 2010, p. ix).
Even returning to trend levels appears challenging in the
context of an average annual decline in MFP of 0.6 per
cent per year over the five years 2007-11. Given a desire
to improve productivity growth, identifying the causes
of the poor performance is an important precursor to
formulating a policy response.
- The recent mining-related changes in Australia’s
terms of trade, however, are substantial. The change
in the relative prices for goods and services in
the Australian economy has resulted in economywide changes in the allocation of capital and
labour. Parham (2012) suggests that ‘a large part
(perhaps between a half and three quarters) of
the productivity growth slump (between the 199904 and 2004-08 business cycles) stemmed from
adjustment pressures. These pressures have had
negative effects on productivity growth that reflect an
economy in transition to a new level of productivity.’
In particular, Parham points to the substantial
growth in inputs in the Australian economy—from
the point of view of productivity, the decline in MFP
is a situation characterised by substantial growth in
inputs without a commensurate increase in outputs.
There is only modest agreement about the causes of
the decline in productivity, which is possibly a reflection
of the sometimes equivocal evidence and the political
implications. Several of the proposed explanations
suggest the decline in the rate of productivity growth
should not elicit as much concern as it has:
®®
Reversion to the mean. Productivity growth during
the 1990s was at record levels. Hence it might be
expected that productivity growth should decline
from these levels. Related explanations raise issues of
comparison and measurement including the influence
of the business cycle—for instance, fluctuations in
aggregate demand leaving fixed capital (trucks, rolling
stock, planes, ships, docks) under-utilised—or failing to
2
The restructuring of the Australian economy. At least
two forms of restructuring are identified:
®®
The effect of particular industries. It has been
suggested that the decline in productivity is not
an economy-wide phenomenon, but results from
The argument is sometimes known as Baumoi’s ‘cost disease’ (Baumoi 1967)’.
Figure 2
Annual changes in gross value added per paid hour of work
in the market economy, Australia, 1995-96 to 2011-12 (%)
4.5
% growth in GVA per hour
3.1
3.4
4.1
3.8
4.3
0.2
‘96
‘98
Based on data from ABS (2012a), Table 1. Key National Accounts Aggregates. Series ID A3606050F.
-0.3
‘00
‘02
3 | productivity growth in australia
(positive or negative) changes in only a few industries
(mining and agriculture are frequently mentioned).
These industry-level changes are associated with
particular and unique causes that can be addressed
by government, if at all, by targeted responses.
Eslake and Walsh (2011), for instance, concluded
that exclusion of particular industries from aggregate
estimates made little difference to the decline in
labour productivity.
®®
®®
®®
less rapid than it had been in the 1990s when the
information and communication technologies were
being implemented and having a significant impact.
®®
A slowdown in microeconomic reform, particularly
once the competition payments that were being made
to State governments for implementing reforms in line
with the National Competition Policy ended in 2006.
Productivity may have improved in 2011-12. Economic
activity is a constantly changing story and the narrative
reflects the status of the currently published statistics.
The estimates of industry productivity growth and of the
particular types of productivity growth are, at the time of
writing, available up to the financial year 2010-11. The
first summaries of economic activity for the financial
year 2011-12 are provided by the ABS in their National
Accounts. Understandably it takes more time to publish
detailed analyses such as productivity growth estimates.
A shortage of suitably skilled labour, especially in
the context of new mining developments in remote
areas, although the shortages in these projects have
flowed through to other industries. This explanation
is related to explanations that relate to particular
industries and economy-wide dislocation resulting from
the expansion of the mining industry. The long-term
policy response has been a raft of changes to schools
through the Educational Revolution and policies to
improve participation in VET and higher education and
eventually to raise the qualifications and skills profile
of the workforce. Changes to the level and nature of
immigration programs have also attempted to address
skill shortages.
There are, however, indications in some parts of the
2011-12 National Accounts that labour productivity
growth (as measured by gross value added per hour
of work) improved in 2011-12. The estimates in Figure
1 and Table 1 only go up to 2010-11. Figure 2, on
the other hand, includes estimates for 2011-12 and
highlights the strength of the apparent improvement—
labour productivity growth appears to have returned to
levels not seen since 2004 and comparable with levels
prevailing in the mid and late 1990s. The values in Figure
2 bear directly on labour productivity, but there must be
some expectation that this increase will also be reflected
in estimates of changes in multi-factor productivity
growth. Although earlier comments in this report
drew attention to the dangers of attaching too much
importance to estimates for single years, the apparent
turnaround is impressive and is an important caveat on
commentary in the rest of this report.
Inadequate (often transport-related) infrastructure.
Perhaps the iconic illustration of infrastructure
bottlenecks has been the picture of bulk carriers
queued at Dalrymple Bay and Newcastle waiting
to load because of inadequate port facilities. The
adequacy of infrastructure applies more generally to
road, rail and air transport—the costs of delays can be
substantial. In the context of additional funding, part
of the government response has been the creation
of Infrastructure Australia to provide advice on the
planning, funding and implementation of Australia’s
future infrastructure needs.
Lower research and development, as technological
innovation in the early part of this century was
4.6
3.7
1.5
2.2
2.1
1.0
0.1
‘04
-0.7
‘06
‘08
0.0
‘12
Productivity and productivity growth in the Australian transport and logistics industries
20
Productivity growth is a major
influence on economic growth.
Improving the living standards of its citizens is an
important goal of national governments. Economic growth
is a major contributor to improving living standards and
can be attributed to three major sources:
®®
More people can work more, which is not the same
as increasing the number of people or population
growth—improving living standards requires
improvement per person. Instead it means that:
- a higher proportion of the population is working,
that is, the workforce participation rate increases.
Workforce participation rates of course fluctuate
with overall business activity; and/or
- each worker works for more hours per year, or
broadly speaking, that full-time employment
increases as a proportion of overall employment.
®®
®®
The proportion of the Australian population in paid
employment has increased from about 42 per cent in
1980 to 50 per cent in 2010, providing a potentially
substantial boost to living standards3. The doubling of
part-time employment over the same period from 15
per cent to 30 per cent of total employment has been
a strong countervailing effect. Nevertheless, while
population grew by 40 per cent between 1986 and 2010,
actual hours worked grew by 55 per cent 4.
The amount of capital per worker (or hour of work)
increases. The shift towards more capital-intensive
production has been a near-permanent feature of the
Australian economy and a major source of economic
growth. Capital deepening has allowed each worker
to produce more for each hour of work. From 1986
to 2011 the index for capital services used for
productivity growth estimates grew at an average
annual compound rate of 4.4 per cent compared with
only 1.1 per cent for the index of hours worked5.
®®
People can work more productively, that is, for the
same hours of work, the same amount of capital and
the same amount of other inputs, more is produced—
or productivity growth.
Improving productivity is often viewed as the
preferred approach to improving living standards.
There are limits on the extent to which the average
hours of work per person can increase and in any case
constantly increasing hours of work may not correspond
with many people’s concept of higher living standards.
Further, Australia’s ageing population profile means that
further increasing the hours of work per person will be
challenging6. Similarly funding investment in additional
capital may require foregoing current expenditure
(reducing present living standards) by increasing savings
or alternatively may require overseas borrowing and
higher levels of debt.
On the other hand, productivity growth appears to offer
gains without any cost and in some respects to offer the
possibility of on-going increases in output through some
of the elements of human and intellectual capital and
intangibles that underpin endogenous growth theory—
a model that posits mechanisms for self-sustaining
economic growth. In practice many of the elements
that can contribute to productivity growth entail at
least short term costs and in recent years in Australia
and elsewhere sustained productivity growth has
proved elusive.
3
ABS (2010b), Table 01 Labour force status by social marital status, age and sex
4
ABS (2010b), Table 11 Employed persons and actual hours worked, industry and sex and ABS (2010a), Table 9 Estimated resident population by single year of age, Australia
5
ABS (2012c), Table 9 Hours worked indexes, and Table 10 Capital services indices
6
Australian Government (2010). The proportion of working age people is projected to fall, with only 2.7 people of working age to support each Australian aged 65 years and
over by 2050 compared to 5 working aged people per aged person in 2010 and 7.5 in 1970 (p. viii). The ageing effect is partly offset by the projected decline in the number
of 0 to 14 year-olds compared with the number of 15 to 65 year-olds.
22
50%
55%
The link between living standards and productivity is
less direct than it may appear. Productivity growth is
mostly concerned with changes in the physical volumes of
goods or services independent of prices. Changes in living
standards, however, can result from changes in relative
prices. Higher prices of exports compared with imports
(the terms of trade) can lead to increases in National
Income for constant output. Improvement in the terms
of trade has been an important feature of the Australian
economy from about 2000 onwards and is associated with
increases in China’s demand for minerals, metals and gas
and petroleum.
domestic labour (childcare, cooking) is transformed from
being un-valued to valued when it enters the market
economy as (mostly) women move from being unpaid
domestic labour to paid labour and often consumers of
domestic services. GDP growth generated by increased
levels of employment and hours of work can be at
the expense of voluntary work, family formation and
leisure. While increases in participation in employment
have limits, some aspects of productivity growth are
sustainable and perhaps even self-sustaining.
of the Australian population in paid employment
in 2010 has increased from about 42 per cent in
1980.
The importance of the size of the recent change in the
terms of trade should not be underestimated simply
because of repetition— in the second half of the 20th
century the terms of trade index averaged in the mid60s, peaking in the low 80s in the early 1970s. Between
1999 and 2011 the index more than doubled from 60 to
129—high relative prices for Australian (mostly iron ore
and coal) exports that are more than sufficient to generate
considerable structural change in the Australian economy.
And by one estimate at least, sufficient to lift national
income by 12 per cent to 15 per cent beyond what it would
otherwise have been (Stevens 2010). While declining
productivity need not necessarily lead to declining living
standards if there are sufficiently strong countervailing
forces (more labour, more capital, better terms of
trade), it still results in living standards that are lower
than they would otherwise be if productivity growth was
sustained—and productivity growth becomes that much
more important when other influences on living standards
become less benign.
The close link between measures of productivity and GDP
means discussion of productivity growth is sometimes
open to the broader criticisms of GDP as a measure of
economic growth—that it is part of an accounting system
that fails to include some (particularly environmental and
social) benefits and costs (OECD 2005). For instance,
7
of actual work hours grew in between
1986 and 2010 while population grew by 40 per
cent.
Productivity growth is about measuring changes in the
quantity of output. Changes in quality of that output may
not be adequately captured in estimates of productivity
growth, which may lead to underestimating productivity
growth. These kinds of reservations mean estimates of
productivity growth should not be taken at face value—
as with many other measures, they are indicative rather
than definitive.
Growth accounting based on the national accounts
can be used to show the relative contributions
to aggregate growth in output of improvements
in productivity and increases in the amount of
capital and the hours worked in the economy.
Gross value added (GVA) is a measure of the value
of output of production. It is the difference between
the dollar amount of goods and services that have
been produced, less the dollar cost of all intermediate
(non-labour and non-capital) goods and services that
were used in the production process7. Its calculation is
restricted to the market sector of the economy where
there are market-based prices for goods and services.
GVA is closely related to the more widely used measure
of Gross Domestic Product (GDP), but is expressed
in terms of basic prices rather than purchaser prices,
that is, it excludes taxes and subsidies in the prices
of goods and services. Hence GVA seeks to measure
value in terms more relevant to producers’ decisionmaking about inputs and outputs.
More formally, value added is the weighted difference between growth in basic price gross output and intermediate inputs, with the current price shares of value added
and intermediate inputs in gross output as weights.
Productivity and productivity growth in the Australian transport and logistics industries
Table 2
Sources of annual output growth, Australia 1995-96 to 2010-11(%)
Year ending
June
1996
1998
2000
2002
2004
2006
2007
2008
2009
2010
2011
1995-11
pa
Output and population growth (%)
GVA
4.7
5.0
4.2
3.9
4.7
3.2
4.1
4.3
0.7
2.4
2.4
75.9
3.6
Population
1.3
1.0
1.2
1.2
1.2
1.5
1.5
1.8
1.8
1.3
1.3
23.5
1.3
Growth of inputs (%)
4.3
5.3
4.6
3.4
5.6
6.6
6.3
7.6
5.9
4.6
5.0
124.8
5.2
Labour hours
1.4
1.7
4.0
-0.9
1.5
1.5
3.1
3.1
0.1
-0.3
2.7
26.3
1.5
Hours adj.
2.3
2.3
4.6
-0.5
3.5
1.9
3.6
3.4
0.5
0.1
3.1
36.6
2.0
Cap/Lab ratio
3.4
3.8
0.3
3.7
4.0
5.4
2.5
4.2
5.0
5.7
2.7
170.0
3.6
Components of GVA growth (%)
Capital
1.8
2.2
1.9
1.4
2.4
2.8
2.7
3.2
2.5
2.1
2.2
---
2.2
Labour hours
0.8
1.0
2.3
-0.5
0.9
0.9
1.7
1.7
0.1
-0.2
1.5
---
0.9
MFPgva (inc)
2.0
1.8
-0.1
3.1
1.4
-0.4
-0.4
-0.6
-1.9
0.4
-1.3
---
0.5
Components of GVA growth with adjustments for labour composition (%)
Capital
1.8
2.2
1.9
1.4
2.4
2.8
2.7
3.2
2.5
2.1
2.2
---
2.2
Labour hours
0.8
1.0
2.3
-0.5
0.9
0.9
1.7
1.7
0.1
-0.2
1.5
---
0.9
Labour comp.
0.4
0.3
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.2
---
0.3
MFPgva (ex)
1.5
1.4
-0.4
2.8
1.2
-0.7
-0.6
-0.8
-2.1
0.2
-1.5
---
0.3
Capital
0.42
0.41
0.41
0.42
0.42
0.43
0.43
0.43
0.44
0.46
0.46
---
0.43
Labour
0.58
0.59
0.59
0.58
0.58
0.57
0.57
0.57
0.56
0.54
0.54
---
0.57
Income share (%)
Based on ABS (2012b), Table 13 Productivity in the market sector. GVA is gross value added, Capital is capital services, Labour hours is hours of paid work, Hours adj are hours of
labour adjusted for labour composition, Labour comp. is labour composition (hours adjusted for labour quality), MFPgva (inc) is gross value added multifactor productivity including
any labour composition effects, MFPgva (ex) is gross value added multifactor productivity excluding any labour composition effects. The cumulative contribution of Capital, labour
and MFPgva do not sum to the cumulative growth in GVA because they have different bases. Years are years ending in June. Values for 16 market-based industries. Population
values are adapted from ABS (2010a), Table 4 Estimated resident population, states and territories (number).
3.1Output
The Australian economy continues to grow. Table 2
shows growth in output as measured by GVA from the
Australian economy from 1995 to 2011. Over that period
growth in output averaged about 3.6 per cent per year.
It has fluctuated with quite low growth in 2000-01 (2.0
per cent) and 2008-09 (0.7 per cent, corresponding to
a mild economic downturn and the trough of the global
financial crisis (GFC) respectively. Output growth was
particularly strong during the second half of the 1990s
as the economy recovered from a challenging period
in the early 1990s, but was also strong in the two years
preceding the GFC. Growth in output has been subdued
since the GFC and has been well below the average for
the period and about half the growth rate experienced
during stronger years. The very strong terms of trade
since the GFC have partly offset the slower rate of
growth in output.
Output growth has outpaced population growth.
Output growth needs to be considered in the context of
population growth, because it is output per person that
ultimately influences living standards. Growth in output
has been consistently higher than population growth over
the period, even when very high rates of net overseas
migration and higher birth rates in the mid and late
2000s contributed to population growth rates that were
historically quite high. The only exception was during
the onset of the GFC when the rate of population growth
(1.8 per cent exceeded output growth (0.7 per cent).
Comparisons of growth in output between countries
also need to take into account differences in population
growth, especially when a country such as Australia,
which has a reasonably high rate of population growth, is
compared with European countries, many of which have
stable or declining populations.
Capital has been growing faster than labour.
Table 2 shows the rate of change for three sources
of output growth:
®®
hours of work
®®
capital services
®®
multifactor productivity
3 | productivity growth in australia
3.2 Hours of work
All else equal, the more hours people work, the greater
the output. Additional hours of work can be generated
by population growth, higher workforce participation
and each working person working more hours (or, put
differently, more people in full-time work).
The proportion of the Australian population in paid
employment has increased from about 42 per cent in
1980 to 50 per cent in 2010, providing a potentially
substantial boost to living standards8. The doubling of
part-time employment over the same period from 15
per cent to 30 per cent of total employment has been
a strong countervailing effect. Nevertheless, while
population grew by 40 per cent between 1986 and 2010,
actual hours worked grew by 55 per cent 9.
While population grew at an average of 1.3 per cent
per annum from 1995, hours of work grew slightly
more quickly at an average rate of 1.5 per cent (Table
2). As might be expected, changes in hours of work
Figure 3
vary with the business cycle, albeit with a slight lag,
declining in 2002 and 2010 as unemployment increased,
which, together with 2009, were the only years in which
population growth exceeded growth in hours of paid
employment. Hours of paid work recovered strongly in
2011.
Quality adjusted hours of work (2.0 per cent per annum)
has grown more strongly than unadjusted hours (1.5
per cent), reflecting the investment in education and,
perhaps ironically, the ageing of the workforce. Table 2
also includes measures of hours of work adjusted for
labour composition or the quality of the workforce—a
measure based on the age profile of the workforce
(which is taken to reflect the experience of the
workforce) and the education of the workforce (which
is measured by the proportion of the workforce with
post school qualifications). The quality adjustment is
based on the links of education and experience with
earnings per hour, which is interpreted as an indicator of
worker productivity.
Annual growth in gross value added, labour and capital inputs and multifactor productivity in the market economy, Australia, 1995-2011 (%)
250
225
% growth from 1995
200
175
GVA
CapServ
Popn
MFP
Hours
150
125
100
75
‘95
97
‘99
‘01
‘03
‘05
‘07
‘09
‘11
See notes to Table 2.
8
ABS (2010b), Table 01 Labour force status by social marital status, age and sex
9
ABS (2010b), Table 11 Employed persons and actual hours worked, industry and sex and ABS (2010a), Table 9 Estimated resident population by single
year of age, Australia
Productivity and productivity growth in the Australian transport and logistics industries
24
3.3 Capital services
3.4 Productivity growth
The amount of capital (assets such as equipment, etc.)
used in production is more challenging to measure than
simply counting the hours of paid work. For estimates of
productivity the amount of capital is measured by capital
services, which is an attempt to gauge the productive
efficiency or capacity of the capital stock of the economy.
It is similar to the assets of a firm, except on a larger
scale. Each year new capital is added to the stock of
capital and each previous year’s capital is depreciated.
For a firm, however, depreciation initially reduces the
value of assets quickly and then more slowly to reflect
the economic value of those assets. With capital
services, however, the productive capacity is assumed to
decline initially only slowly, and then progressively more
quickly. As with the capital stock of a firm, estimates
of capital services are based on a number of broad
categories of asset type, which are assumed to reduce in
productive capacity at varying rates.
The contribution of productivity growth to output growth
has been declining. The growth in output as measured
by GVA can be decomposed into the contributions of
changes in capital services, hours of paid work and
multifactor productivity. It is possible to estimate the
extent to which GVA should increase given any measured
increases in labour and capital. Any discrepancy is
attributed to, or simply labelled, a change in multifactor
productivity. Hence measured multifactor productivity
growth is a residual in growth accounting—it is what is left
over of changes in GVA after any changes in GVA that can
be attributed to changes in labour and capital are taken
into account.
The value of the productive capacity of capital, or
capital services, has been increasing at a faster
rate than labour (5.2 per cent compared with 1.5 per
cent) over the period 1995-2011 and growth peaked at
3.2per cent per annum in 2008. The more rapid growth
of capital services means the ratio of capital to labour
has increased, which is shown in Table 2. If each hour
of labour is employing more capital services, then, all
else equal, labour productivity should be increasing—a
situation that typically contributes to improved living
standards. On the other hand, each additional amount
of capital services is being matched with less labour
and hence its productivity might be expected to decline,
as in Figure 3.
The annual growth in capital services appears (and
is) more stable than growth in labour. On the other
hand, new investment is more volatile from year-toyear than suggested by the values in Table 2. Current
investment in capital services is only a fraction of total
capital services. In this sense, the majority of capital
services are fixed—the investment has already been
made. Any adjustment to current or expected changes
in economic activity can only be made in the current
year, by deferring, abandoning or bringing forward
investment. Large investment decisions, however, are
unlikely to affect only one year and their costs are often
time-sensitive. There may be little choice for enterprises
other than to proceed regardless of any short-term
downturn in economic activity.
Given the fixed nature of a significant proportion of
capital services, a decline in economic activity might be
expected to reduce the productivity of capital. Instead
of running two or three shifts a day, for instance, a
decline in demand for the output of a manufacturing
plant may mean only one shift operates. The capital
services are more or less unchanged, but the gross
value added presumably declines.
The first row in Table 2 shows output grew at an average
rate of 3.6 per cent per annum between 1995 and 2011.
The panel labelled Components of GVA growth breaks
this down into three components—on average across
the period 2.2 percentage points of this growth was due
to increased investment in capital and 0.9 percentage
points was due to the increase in hours of paid work. The
additional growth in GVA that cannot be explained by the
extra capital and labour is 0.5 percentage points. This
residual growth in GVA is attributed to changes in the way
in which labour and capital are used in the production
process and is labelled multifactor productivity (MFP).
High levels of investment and increasing the capital
labour ratio have been important drivers of economic
growth and improving living standards in Australia.
Growth in capital services has accounted for more than
half of Australia’s economic growth over the last decade
and a half. High levels of employment have also been
important, contributing about a quarter of the economic
growth during that period (Table 2). Much of the growth
in hours of work, however, appears to be associated
with population growth and therefore may not contribute
substantially to higher living standards. The sustainability
of growth associated with ever higher levels of labour
force participation and more hours of work per worker
is doubtful, particularly in the context of an ageing
population profile.
The 0.5 percentage points of GVA growth attributable
to productivity growth are more important than it might
appear. It is just under 15 per cent of the total growth in
GVA. More importantly, MFP is a pure source of improving
living standards—it underpins growth in output per
person. The contribution of productivity growth to growth
in output has declined in recent years. For the four years
1996-99 it averaged 2.1 per cent per year, while for the
five years 2006-11 it actually fell by an average of 0.4 per
cent per year. Part of this decline may be associated with
the business cycle and the global financial crisis—MFP
growth was also quite low in 2000 (-0.1 per cent) and
2001 (0.7 per cent), but after a strong rise in 2002 (3.1
per cent), it averaged only -0.1 per cent growth between
2003 and 2008 while the Australian economy was growing
quite strongly.
3 | productivity growth in australia
The decline in the growth of multifactor productivity
has had a substantial impact on output (and on living
standards). From 1999 to 2011 cumulative growth in
GVA was 46 per cent. If the growth in MFP had been
maintained at 2.1 per cent per year across this period,
all else equal, the cumulative growth in GVA would have
been 86 per cent—almost twice as high.
The decline in MFP comes in the context of policy
concerns about the changing age-profile of the
population—the number of people over the age of 65
is increasing as a proportion of the total population
Australian Government (2010)10. While this does
not necessarily affect estimates of future growth in
labour inputs (the 15 to 64 year-old population is still
growing), it does influence living standards because
proportionately more people who are making no
measured contribution to GVA need to be supported
from that GVA. Clearly policies to improve MFP growth,
in combination with policies designed to increase
the proportion in the workforce and the average of
hours of employment, are part of the response to
this demographic change. Changes to pension and
superannuation age eligibility criteria are elements of
this strategy.
Improvements in education and training play an
important role in economic growth. Over time, national
and state governments in Australia have recognised
the importance of the skill levels of the workforce to
the productivity of the economy. Accordingly they
have sought to improve both the level of school
attainment—measured variously by years of schooling
completed, age at leaving school, and more recently
and more directly, by performance on state and national
standardised tests—and the level of post school
qualifications in the workforce. In recent years, at the
national level the Rudd and Gillard Labor governments
have introduced policies designed to improve the skills
of the workforce, mostly in association with state and
territory governments through the Council of Australian
Governments (COAG).
10
Direct measures of the number of hours worked do
not recognise changes in the skills composition of
the workforce. As Reilly, Milne and Zhao (2005) put it,
under the assumption of homogenous labour inputs,
an hour’s work from a brain surgeon is treated as equal
to an hour’s work from a cleaner. The long-term trend
towards a more skilled and experienced workforce is
reflected in the values for adjusted hours of work and
labour composition in Table 2.
If labour is assumed to be all the same, then the shift
towards a more skilled workforce is included as part
of the estimate of growth in multifactor productivity. If
quality-adjusted labour inputs are used instead, then
the effect of skilling the workforce on GVA growth can
be identified separately from growth in MFP. Table
2 provides these estimates in a separate panel. The
contributions to GVA growth of changes in capital
services and hours are unchanged, but the original
estimates of MFP growth from the first panel are now
split into two effects—up-skilling the workforce and
MFP growth excluding that up-skilling. The effect on
growth in gross value added of skilling the workforce
is positive and reasonably uniform across the period—
between 0.2 per cent and 0.3 per cent across the
period, tending towards 0.2 per cent in recent years.
Taking out this positive effect, means that the remaining
component of MFP is either smaller or more negative
across the period.
These estimates of the impact of a more skilled
workforce point to the value of the additional private
and public investment in education over the period.
Although the percentage point values are small—0.2
per cent to 0.3 per cent—they are based on very large
base values—the GVA of the Australian economy.
Additionally, under this model at least, the additional
skills continue to deliver GVA over many years.
The ageing effect is partly offset by the projected decline in
the number of 0 to 14 year-olds compared with the number
of 15 to 65 year-olds.
46%
was the c
umulative
growth in
GVA from
1999 to 2
011.
Productivity and productivity growth in the Australian transport and logistics industries
26
Comparisons of productivity growth over time provide a basis for making
judgements about whether a particular country’s productivity growth at a given
time is relatively high or low.
International
comparisons
v
4
The recent decline in Australia’s
productivity growth compared
with earlier periods in its economic
history is one of the bases for
current policy concern.
Comparisons of productivity growth among countries
provide another basis for forming judgements about
whether a particular country’s productivity growth is
relatively high or low and whether recent trends reflect
broader global changes or country-specific changes.
International comparisons in this section draw on
data from the OECD and result from a recent study of
international measurement of total factor productivity
growth. Further cross-country comparisons are provided
in the next section in the context of a discussion of
productivity growth in the Transport & Logistics industry.
It is often difficult to make meaningful international
comparisons of economic and other activities
because of institutional and cultural differences
between countries. Comparisons of productivity and
productivity growth among countries are confounded
by differences in prices as well as differences in
the mixes of production and consumption among
countries and differences in quality. Because of their
volatility, exchange rates are not particularly useful
for converting prices to a common measure. Instead
considerable effort goes into producing purchaser
parity price (PPP) indexes which correspond more
closely to the prices paid for common goods across
countries11. Wages corrected for PPP differences can
be used as a common indicator of labour productivity
across countries.
In a recent paper, Ashenfelter (2012) provides estimates
of total factor productivity (TFP) for a number of
economic regions relative to the USA. These values
are reproduced in Table 3. The first estimates of TFP
are derived from a variant of a standard approach
based on adjusted output per person (Hall and Jones
1999). The second uses the relative wages of workers
at McDonald’s restaurants and the prices of Big Macs
to estimate TFP— an alternative calculation of the real
wage at purchasing-power parity informed by The
Economist’s only somewhat frivolous Big Mac Index.
Ashenfelter notes the broad similarities of the two sets
of estimates, and attributes the greater discrepancies for
Australian and New Zealand (Oceania) and for Western
Europe to stronger minimum wage laws in those
regions. In other results, Ashenfelter maps movement
towards convergence in measures of absolute
productivity between developed and developing
countries and regions over the last two decades. Some
results point to decline in absolute levels of productivity
among developed countries.
11
The World Bank and OECD produce PPP indexes. The Economist’s Big Mac
index is a very narrowly defined version of a PPP index that is based on the
price of one standard good across countries.
4 | international comparisons
Table 3
Measures of total factor productivity, selected countries, 2007
Country
TFP1
TFP2
Economic region
TFP1
TFP2
USA
1.00
1.00
The rest of Asia
0.29
0.14
Canada
0.91
0.93
Eastern Europe
0.33
0.27
Russian Federation
0.37
0.32
Western Europe
1.00
1.29
South Africa
0.26
0.23
Middle East
0.29
0.13
China
0.21
0.11
Latin America
0.36
0.16
India
0.15
0.06
Oceania
0.95
1.50
Japan
0.90
1.01
Based on Ashenfelter (2012), Table 4, p.37. TFP is total factor productivity. Estimate 1 is based on the Hall-Jones method of estimating output per person adjusted for differences in
schooling levels of the work force but not capital/output ratios. Estimate 2 is a measure based on dividing the hourly wages of McDonald’s workers by the price of a Big Mac.
Australia has total factor productivity levels
comparable with the USA, Canada, Western Europe,
Japan. Focusing on the more orthodox measures of
total factor productivity, Table 3 points to a reasonably
close grouping of absolute levels of productivity in the
USA, Canada, Western Europe, Japan and Oceania
(dominated by Australia), with other parts of the world
having substantially lower levels of productivity.
Using the same source as that cited in the BCA report,
and making the comparisons in each country’s own
currency, it appears the cost of building all these forms
of infrastructure declined in Australia between 2008
and 2011 and in fact declined by as much or more than
in the USA13. These values, with some caveats, more
closely reflect relative productivity changes in Australia
and the USA than the values in the BCA report.
This conclusion stands in stark contrast to some
commentary on productivity levels In Australia. Some
of this commentary appears to confuse changes in
productivity (productivity growth) with actual levels of
productivity (referred to here as absolute productivity
or which might be referred to as base productivity).
Until recently, Australia has experienced a decline in
productivity growth, but its absolute level of productivity
is still comparable with that in most other advanced
economies. Poor productivity growth would eventually
change this situation.
Table 4 draws on OECD data to show labour
productivity growth in the total economy averaged
across three years for 1990-92, 1999-01 and 200911. The averaging removes some of the year-to-year
variation in estimates of productivity growth and the
values span about two decades. Countries are sorted
in descending order by productivity growth, with the
values for Australia highlighted.
Other commentary appears to confuse productivity
with the more nebulous concept of international
competitiveness—or the cost of doing business. For
instance, a recent report from the Business Council of
Australia focused on the costs of doing business and
noted what it referred to as cost premiums in Australia—
it reports, for instance, that compared with the USA, in
Australia it costs 62 per cent more to build a hospital,
26 per cent more to build a school, 90 per cent more to
build an airport, or 43 per cent more to build a shopping
centre12. The discussion of these results frequently cites
productivity differences as a major contributor.
Just as at the level of individual firms productivity
is not the same as profitability, so at the level
of countries, productivity is not the same as
competitiveness. Commentary on this BCA report
notes that the estimates are denominated in US dollars
and reflect changes in currency exchange rates.
While this may be appropriate for a paper examining
incentives for international investment, it has little to do
with productivity changes, despite the interpretation.
Australia’s rate of labour productivity growth ranks a
little below the middle of a group of 35 countries. For
2009-11 Australia ranked 20th out of the 35 countries
for which estimates were available from the OECD. This
suggests an average level of labour productivity growth.
Although most of the countries in the list are European,
Table 4 also includes Australia, Canada, Chile, Israel,
New Zealand, Mexico, Japan, Korea and the USA.
From Australia’s perspective, there are nevertheless
many important omissions—Brazil, India, China, South
Africa and a number of South East Asian countries,
especially Indonesia. There must be a suspicion
that labour productivity in many of these developing
countries has been growing more rapidly than in
Australia, underpinned by a rural-urban population shift
associated with industrialisation.
Compared with the average of Group of 7 countries,
growth in labour productivity in Australia was markedly
lower in 2009-11 (0.5 per cent compared with 1.4
per cent). Labour productivity growth in the USA (1.7
per cent), often used as a benchmark for productivity
growth, was substantially higher than in Australia (0.5
per cent) and Germany (0.3 per cent) was the only major
economy with a lower rate of productivity growth than
Australia.
12
Business Council of Australia (2012), Figure 12, p. 29.
13
See http://mattcowgill.wordpress.com/2012/06/07/productivity-surged-but-were-becoming-a-low-productivity-nation/ 7 June 2012. The BCA report uses data from Turner
& Townsend (2012).
Productivity and productivity growth in the Australian transport and logistics industries
30
Table 4
1990-92
Labour productivity growth by selected countries, 1990-92, 1999-01, 2009-11
%
1999-01
%
2009-11
%
Korea
6.4
Poland
6.5
Korea
4.8
Portugal
5.1
Estonia
5.7
Ireland
3.7
Ireland
4.4
Czech Rep.
5.1
Poland
3.3
Norway
3.5
Korea
4.7
Estonia
2.3
Japan
3.3
Ireland
3.9
Japan
2.3
Germany
3.1
Slovenia
3.2
Chile
2.1
Belgium
2.7
Slovak Rep.
3.1
Portugal
2.0
Turkey
2.5
Greece
3.0
Spain
2.0
Australia
2.5
Hungary
2.9
USA
1.7
UK
2.4
Norway
2.8
Slovak Rep.
1.3
Finland
2.4
Russian Fed.
2.7
Czech Rep.
1.2
Israel
2.3
UK
2.6
Israel
1.2
Luxembourg
2.3
USA
2.6
Sweden
0.9
Denmark
2.2
Chile
2.6
Canada
0.8
USA
2.1
Canada
2.4
Austria
0.8
Spain
1.9
Finland
2.3
Denmark
0.8
France
1.8
Mexico
2.3
France
0.7
Sweden
1.2
Japan
2.3
UK
0.5
Canada
0.9
Australia
2.1
Russian Fed.
0.5
NZ
0.8
Portugal
2.1
Australia
0.5
Netherlands
0.8
Germany
2.0
Switzerland
0.5
Italy
0.8
France
2.0
Turkey
0.4
Greece
0.6
Sweden
2.0
Iceland
0.3
Mexico
0.1
NZ
1.8
Germany
0.3
Iceland
-0.7
Austria
1.7
Mexico
0.3
Switzerland
-2.2
Israel
1.6
Slovenia
0.2
Austria
na
Netherlands
1.6
Netherlands
0.2
Chile
na
Luxembourg
1.5
NZ
0.1
Czech Rep.
na
Switzerland
1.4
Italy
0.1
Estonia
na
Italy
1.3
Norway
0.0
Hungary
na
Belgium
1.1
Finland
-0.3
Poland
na
Iceland
1.1
Belgium
-0.4
Slovak Rep.
na
Denmark
0.8
Hungary
-0.5
Slovenia
na
Spain
0.1
Greece
-1.3
Russian Fed.
na
Turkey
-1.6
Luxembourg
-2.8
G7 countries
2.3
G7 countries
2.5
G7 countries
1.4
Adapted from OECD.Stat, Data set: Labour productivity growth in the total economy, data extracted on 13 Oct 2012 03:19 UTC (GMT). Values are for average LP across three
years. Countries are sorted from high to low on average LP for each period. Countries selected on the basis of availability of estimates for the three years 2009-11. Values are for
the total economy, not the market economy, and hence values for Australia may differ from those elsewhere in this report. G7 countries are Canada, France, Germany, Italy, Japan,
UK, and USA.
4 | international comparisons
Table 5
Multifactor productivity growth by selected countries, 1986-88, 1996-98, 2006-08
1986-88
%
1996-98
%
2006-08
%
Korea
6.4
Ireland
4.5
Korea
3.4
Japan
2.9
Finland
2.9
Austria
2.5
Finland
2.5
Korea
2.8
Germany
1.4
Ireland
2.3
Australia
2.6
Finland
1.4
France
1.5
Sweden
1.6
Switzerland
1.0
Italy
1.5
Austria
1.4
Japan
0.7
NZ
1.1
USA
1.3
USA
0.3
Spain
0.9
Germany
1.1
France
0.2
USA
0.7
France
1.0
Ireland
0.1
Sweden
0.7
Switzerland
1.0
NZ
0.0
Australia
0.5
NZ
0.9
Spain
Canada
-0.3
Canada
0.8
Sweden
-0.1
0.3
Australia
-0.3
0.0
Canada
-0.3
Italy
-0.4
0.0
Austria
na
Japan
Germany
na
Italy
Switzerland
na
Spain
Mean 12 countries
1.7
Mean 12 countries
1.6
Mean 12 countries
0.4
Mean 15 countries
---
Mean 15 countries
1.5
Mean 15 countries
0.7
-0.1
Adapted from OECD.Stat, data extracted on 13 Oct 2012 02:15 UTC (GMT). Values are for average MFP across three years. Countries are sorted from high to low on average
MFP for each period. Countries selected on the basis of availability of estimates for the three years 2006-08. Values are for the total economy, not the market economy, and hence
values for Australia may differ from those elsewhere in the report.
Australia’s labour productivity growth has fallen only
very slightly compared with other countries over the
last two decades. Visually, Table 4 can be misleading.
Australia has an apparently high ranking for 1990-92,
but this is mostly because estimates were not available
for nine countries. Worse still, many of these countries
subsequently had higher rates of productivity growth
than Australia. Had estimates been available for these
countries in 1990-92, and had their relative productivity
growth in 1999-01 prevailed in 1990-92, Australia would
have been eight places lower in 1990-92. Nevertheless,
there appears to be a trend over time—Australia might
have been about 17th out of 35 countries in 1990-92,
19th in 1999-01 and 20th in 2009-11.
An alternative approach to the results in Table 4 would
be to consider Australia’s position relative only to those
countries for which estimates were available in 1990-92.
In that case, Australia’s ranking dropped from 9th, to
11th to 13th across the three periods. These positions
are indicated by horizontal lines. Australia’s international
ranking has been declining, albeit so slightly that the
apparent trend could reflect little more than the choice
of years for comparison and the year-to-year variability
of estimates.
The small relative decline in Australia’s labour
productivity growth is partly because labour
productivity growth has declined in many other
countries. Annual growth in Australia’s labour
productivity declined over time, from 2.5 per cent
in 1990-92 to 2.1 per cent in 1999-01 and then
quite sharply to 0.5 per cent for 2009-11. Australia’s
international ranking, however, did not fall nearly as
markedly because labour productivity growth in many
other countries also declined. Labour productivity
growth in Group of 7 countries, for instance, fell from 2.5
per cent to 1.4 per cent between 1999-01 and 2009-11.
0.5%
was the annual
lia’s
growth in Austra
ity
tiv
uc
labour prod
1.
01
–2
in 2009
1.4%
was th
e la
produc bour
tiv
in Grou ity growth
p
in 2009 of 7 countrie
s
–2011.
Productivity and productivity growth in the Australian transport and logistics industries
32
Productivity and productivity growth in the Australian transport and logistics industries
Industry
comparisons
This section considers
the Transport &
Logistics industry more
specifically.
v
5
5.1 TLISC and the
Transport & Logistics industry
This section outlines a little of the nature, scope,
structure and purpose of TLISC and how these
correspond to the industry-level estimates of
productivity growth produced by the ABS. TLISC
is one of 11 Industry Skills Councils (ISCs). It,
like the other ISCs, is an independent not-forprofit incorporated body funded by the Australian
Government to:
®®
®®
It has three parts:
1. A discussion of the correspondence between
the Transport, Postal and Warehousing category
of the ABS Australian and New Zealand
Standard Industry Classification (ANZSIC)
and the activities of TLISC—
that is, it addresses the question of the extent
to which estimates of productivity growth for
the Transport, Postal and Warehousing industry
correspond to the scope of TLISC.
2. A presentation of estimates of ABS industrylevel estimates of growth in output, inputs and
productivity growth, with a focus on estimates
for Transport, Postal and Warehousing and
the market economy.
3. A presentation of some results that, inter
alia, bear on the level of absolute labour
productivity in Australian industries, but most
focus on comparisons of changes in total
factor productivity in the International Standard
Industry Classification (ISIC) defined Transport
and Storage industry.
®®
provide information and advice to the Australian
Workforce and Productivity Agency, government and
enterprises on workforce development and skills
needs in their area of industry coverage
support the development, implementation and
improvement of training and workforce development
products and services, especially training packages
engage with state and territory governments,
state and territory industry advisory bodies and
peak representative bodies in their area of industry
coverage to address the skills and workforce
development needs of industry.
The purpose of TLISC is to drive the skills and
workforce development agenda across the Transport
and Logistics industries. It has six industry sectors:
®®
Logistics and Warehousing
®®
Road Transport
®®
Rail
®®
Maritime
®®
Aviation
®®
Ports.
The industry sectors are covered
by four training packages:
®®
Transport and Logistics training
®®
Rail training
®®
Maritime training
®®
Aviation training.
Table 6 shows the distribution of enrolments in the
TLISC training packages in 2010. The estimates are
drawn from NCVER’s provider collection and cover
all public provision and publicly-funded private
provision. They exclude privately-funded training
by private providers.
Each course in the collection has an occupational
category attached to it that indicates the
occupational outcome of the education and training.
In practice, of course, training is frequently relevant
to work a particular narrow occupational category,
but nevertheless the values in Table 7 provide a
sense of the vocational education and training
associated with TLISC. Although there is a broad
diversity of occupations ranging from management
to labouring occupations, the focus is clearly on
courses associated with Storepersons (42.2 per cent
of enrolments), Delivery Drivers (29.8 per cent), Deck
Hands (10.4 per cent) and Logistics Clerks (5.4 per
cent).
5 | industry comparisons
Table 6
Enrolments in VET courses by course occupation: TLISC training packages, 2010
Enrolments
Course occupation group (ANZSCO)
No.
Enrolments
%
No.
Course occupation group (ANZSCO)
%
Supply & distribution manager
981
2.0
Railway track plant operator
1
0.0
Transport company manager
1,197
2.5
Automobile, bus & rail drivers, nfd
3
0.0
Aeroplane pilot
134
0.3
Automobile drivers
110
0.2
Air transport professionals, nec
61
0.1
Train & tram drivers
1,036
2.1
Marine transport professionals, nfd
306
0.6
Delivery driver
14,570
29.8
Ship's officer
351
0.7
Storeperson
20,579
42.2
Armoured car escort
2
0.0
Railway track worker
166
0.3
Driving instructor
501
1.0
Freight handler (rail or road)
41
0.1
Travel attendants nec
58
0.1
Waterside worker
28
0.1
Logistics clerks
2,632
5.4
Deck hand
5,084
10.4
Misc. clerical & admin. workers
1
0.0
Railways assistant
29
0.1
Total
48,811
100.0
Crane, hoist or lift operator
66
0.1
Boiler or engine operator
739
1.5
Aircraft baggage handler & airline ground crew
135
0.3
Based on data derived from NCVER’s VOCSTATS. Enrolments in courses in the TLISC, 2010 by course occupation.
Manufacturing.
& Utilities
Construction
Wholesale/
retail
Accommodation/
Food
Transport
Info Media
Finance Pub.
Admin
Health &
Education
Other
Total
Selected TLISC occupations by industry, Australia 2006 (%)
Agriculture/
Mining
Table 7
Supply & distribution
managers
2.3
20.8
2.4
20.4
1.4
36.5
1.4
1.2
5.2
2.5
6.0
100.0
Transport services
managers
0.8
4.8
2.6
4.1
0.5
71.9
0.4
0.6
3.1
1.1
10.2
100.0
Driving instructors
0.3
1.2
0.3
1.0
0.1
7.1
0.0
0.1
3.4
85.4
1.2
100.0
Logistics clerks
3.0
23.6
1.9
26.6
0.6
24.1
2.8
0.6
5.5
2.1
9.2
100.0
Train & tram drivers
1.6
42.6
1.7
25.5
0.3
21.6
0.5
0.2
0.2
0.4
5.4
100.0
Delivery drivers
0.7
2.8
15.7
0.5
4.9
56.4
0.0
0.0
13.2
0.2
5.5
100.0
Storepersons
4.5
12.6
6.5
7.8
0.3
60.5
0.1
0.1
4.0
0.7
2.9
100.0
Deck & fishing hands
53.1
4.2
1.2
5.3
1.3
27.6
0.1
0.1
5.0
0.3
1.8
100.0
Based on data from the ABS 2006 Census of Population and Housing generated using ABS TableBuilder. Percentages exclude any missing data.
Occupation is based on ANZSCO and industry on ANZSIC 2006. TLISC scope is limited to Deck hands.
TLISC and industry, occupation
and education classifications.
The name Industry Skills Council implies that each of
the 11 organisations has a particular industry focus.
On the other hand, as Table 6 shows, the training
packages, which are a core responsibility of the ISCs,
have an occupational rather than an industry focus—
and occupations are not necessarily industry-specific.
Typically the occupations of interest to the ISCs
through their training packages cut across the
broad categories of the ABS’s Australian and
New Zealand Standard Classification of Industries
(ANZSIC)—a classification used by the ABS for most
of its collections, including the National Accounts
that provide the foundation for national and industry
estimates of productivity growth.
Productivity and productivity growth in the Australian transport and logistics industries
36
TLISC Training Packages focus
on jobs in the Transport & Logistics
industry.
Table 7 shows the distribution of selected TLISC-related
occupations across broad industry categories. Transport
(in full, the Transport, Postal and Warehousing industry)
is the main industry for most of these occupations,
particularly for Delivery Drivers (56.4 per cent work in
the transport industry), Storepersons (60.5 per cent) and
Transport Service Managers (71.9 per cent).
The correspondence between TLISC occupations
and the transport industry is less than perfect. This
apparent lack of correspondence follows in part from
the fact that although, for instance, a Delivery Driver
is clearly involved in transport as part of their job, the
industry classification is based on the industry of the
organisation for which the driver works. For instance,
if a Storeperson is employed by say, Woolworths, their
industry will be classified as Retail. If Woolworths were
to out-source this same work to a specialist Transport
and Logistics company, then that worker would be
71.9%
re-classified as working in the Transport, Postal
and Warehousing industry. An understanding of
the creation and definition of ANZSIC is important
because of the sometimes loose connection between
intuitive understandings of what might be included
under Transport, Postal and Warehousing, the scope
of the TLISC and ABS statistics.
ANZSIC 2006 groups together organisations
producing similar goods and services using similar
processes. It is a four-level hierarchical classification
of industries in which specific industries are nested
within progressively broader industry categories. For
instance:
®®
Class:Inter Urban and Rural Bus Transport (4621)
®®
Group: Road Passenger Transport (462)
®®
Sub-division: Road Transport (46)
®®
Division: Transport, Postal & Warehousing (I)
The identification of industry can vary somewhat
across ABS collections. For instance, in collections
that rely upon the self-report of individuals, such
as the Census, the ABS asks for the name and
address of the employer, which can then be linked
of Tr
an
work sport se
rv
i
and n the Tra ice man
Ware
nspo
ager
s
hous
r
ing i t, Postal
ndus
try.
5 | industry comparisons
to ANZSIC. Additionally, however, respondents are
asked directly about the industry of their employer
and answers to this question are based on the
varying understandings of the respondents. The
classification of some respondents who either do
not supply employer information or whose employer
cannot be classified under ANZSIC is therefore based
on self-report.
Under the Australian system of National Accounts
and industry-level productivity growth estimates,
the classification is more rigorous. Organisations
are identified by the level at which their financial
and balance sheet accounts are maintained and
from which a consolidated financial position can be
derived. For instance, the activities of Wesfarmers,
a conglomerate with components in retailing, coal
mining and insurance, among other activities, would
be allocated to the industries corresponding to those
various components because the company identifies
the finances of these components separately.
Organisations that conduct productive activities
that belong to more than one industry class but
do not account for these activities separately are
classified by their main activity using other available
information. The main activity is identified by its
‘value add’, that is, the revenue derived from the
activity minus the costs of conducting that activity.
‘Value add’ may be difficult to identify because by
definition separate accounts are not kept. In that
case, the classification of an organisation may be
based on the relative size of sales of goods and
services, the amount of wages and salaries paid; or
the number of employees. In some circumstances,
the declared purpose of the organisation may
be used. Therefore industry categories such as
Road Transport do not necessarily contain all the
organisations that undertake the activities belonging
to that class.
As classes are aggregated into broader categories, and
ultimately into the highest level of Divisions, the basis of
their classification shifts away from the processes and
organisation of activities towards similarities of output.
The ANZSIC Transport, Postal and Warehousing division
includes organisations:
mainly engaged in providing transportation of passengers
and freight by road, rail, water or air. Other transportation
activities such as postal services, pipeline transport
and scenic and sightseeing transport are included in
this division. Units mainly engaged in providing goods
warehousing and storage activities are also included.
The division also includes units mainly engaged in providing
support services for the transportation of passengers
and freight. These activities include stevedoring services,
harbour services, navigation services, airport operations
and customs agency services (ABS 2006).
Table 8 provides an overview of the broader context
within which the ANZSIC Transport, Postal and
Warehousing division is defined as well as more detail
about the content of the division and the way in which
ANZSIC corresponds to industry-level productivity
growth estimates. Much of the content of Division
I, Transport, Postal and Warehousing, corresponds
to the sectors of TLISC—Road, Rail, Water and Air
Transport and associated services. There are, however,
a few minor discrepancies. Pipelines, for instance, are
included in the ANZSIC Transport division because
they are a means of moving gas and other products.
Grain silos, as part of the storage and warehousing
infrastructure, are also included. Arguably some
components of leisure transport are more closely related
to tourism. These activities may be outside the scope
of TLISC. More detail would probably identify further
modest exceptions. In general, however, this statistical
division corresponds fairly well with the industry sectors
of the TLISC.
Productivity and productivity growth in the Australian transport and logistics industries
38
Table 8 also shows the relative
economic and employment size of
the industry divisions and, in the
case of the Transport, Postal and
Warehousing division, the size of
selected sub-divisions.
®®
The Transport, Postal and Warehousing division, for
instance, contributes about 6.0 per cent of the valueadded by the Australian economy and about 5.2 per cent
of the employment. Within the division, Road Transport
contributes 1.7 per cent of the value-add, Rail Transport
(including Water and Other Transport) 0.9 per cent, Air
Transport 0.6 per cent and Transport Services (including
Postal and Warehousing Services) 2.8 per cent.
Industry-level estimates of productivity growth
depend on the availability of market prices. Three
ANZSIC divisions are deemed not to be sufficiently
market-driven, mainly because of the dominance of
government provision:
®®
®®
Public Administration and Safety—Public
administration, Defence, Public Order, Safety and
Regulatory services
Education and Training—Preschool and School
Education, Tertiary education, Adult, Community
and Other Education
Health Care and Social Assistance—Hospitals, Social
Assistance Services, Medical & Other Health Care
Services, Residential Care Services.
Each of these divisions has some market components—
private security and safety services; non-government
pre-schools, schools, VET and higher education providers;
and private health providers respectively. Nevertheless the
level of government provision of services means that even
for organisations providing commercial services their prices
are not set in a competitive market. Instead prices are often
strongly influenced by government policy and regulation. It
is therefore difficult to estimate productivity growth using
the standard ABS measures.
In summary, the ABS provides separate productivity
growth estimates for the ANZSIC Transport, Postal and
Warehousing division, which, apart from pipelines and
grain silos, mostly corresponds with the scope and
interests of TLISC. The division, however, may include
economic activities that lie outside the scope of the TLISC
and Transport, Postal and Warehousing where a firm that
is predominantly engaged in Transport and Logistics also
undertakes other activities that are not separately identified
in their accounts. Similarly there are firms mainly engaged
in other economic activities that also include Transport and
Logistics as part of those activities. The implications for the
TLISC of any estimates of changes in productivity growth
in Transport, Postal and Warehousing, therefore, need
to be considered with that substantial caveat.
6.0%
of th
e
eco valueno
a
Pos my is dded b
con
y
tal a
nd W tribu the Au
stra
areh ted b
lia
y
ous
ing. the Tra n
nsp
o
rt,
5 | industry comparisons
Table 8
ANZSIC divisions by market status and availability of productivity growth estimates
Contribution to economy
Employment2
Value add1
Market industries
82.1
76.2
Agriculture, Forestry & fishing
2.6
3.4
Mining
8.6
1.4
Manufacturing
9.6
10.8
Electricity, Gas, Water & Waste Services
2.5
1.1
Construction
9.2
9.1
Wholesale Trade
5.0
4.0
Retail Trade
5.2
11.5
Accommodation & Food Services
2.7
6.5
Transport, Postal & Warehousing
6.0
5.2
Road Transport
1.7
Rail Transport
0.9
Water Transport
Air & Space Transport
0.6
Other Transport
Postal & Courier Pick-up and Delivery Services
2.8
Transport Support Services
Warehousing and Storage Services
Information, Media & Telecommunications
3.7
2.2
Financial & Insurance Services
11.4
3.8
Rental, Hiring & Real Estate Services
2.3
1.8
Professional, Scientific & Technical Services
7.7
7.4
Administrative & Support Services
2.7
3.4
Arts & Recreation Services
1.0
1.8
Other Services
2.0
4.0
Non-market industries
17.9
23.8
Public administration & safety
5.8
6.0
Education & training
5.2
7.4
Health care & social assistance
6.9
10.4
1 Per cent of gross value add (GVA) contributed by the industry division for the year to December 2011. The total excludes the contribution from ownership of dwellings
and any corrections for taxes and subsidies and statistical discrepancies (ABS 2012b, Table 5 Gross Value Added (GVA) by Industry).
2 Share of total employment. Values are based on an average of estimates for 2006-07, 2007-08, 2008-09 (ABS 2010b).
Productivity
Productivity
andand
productivity
productivity
growth
growth
in the
in the
Australian
Australian
transport
transportand
andlogistics
logisticsindustries
industries
40
Table 9
Average annual growth in gross value added by industry
and productivity growth cycles, Australia, 1985-86 to 2010-11 (%)
Industries
Productivity growth cycles
Mean
1985/86
1988/89
1988/89
1993/94
1993/94
1998/99
1998/99
2003/04
2003/04
2007/08
Agriculture
1.1
3.6
4.9
3.4
-0.4
8.5
3.5
Mining
5.6
4.6
4.1
2.2
4.4
2.7
3.9
Manufacturing
5.0
0.1
2.1
2.0
1.1
-1.5
1.4
Utilities
4.0
2.4
1.8
1.3
0.9
2.5
2.0
Construction
5.1
-0.1
5.8
5.5
6.3
3.3
4.2
Wholesale
5.7
0.1
6.6
3.3
3.0
1.3
3.3
Retail
1.3
2.5
4.6
4.6
4.3
1.1
3.3
Accommodation & Food
5.3
1.7
5.5
3.2
2.2
-1.4
2.9
Transport, Postal, Warehousing
3.6
2.3
4.6
4.0
5.0
1.6
3.6
Information, Media, Telecom
8.2
9.1
8.0
4.0
4.7
1.2
6.1
Finance & Insurance
12.0
5.5
5.8
5.9
8.6
1.0
6.4
Rental, Hiring, Real Estate
---
---
---
3.2
-0.9
1.5
2.0
Professional, Scientific, Technical
---
---
---
5.3
2.7
6.6
5.0
Admin., Support services
---
---
---
3.4
3.5
-0.4
3.3
Arts, Recreation Services
3.3
1.9
3.7
3.7
4.1
3.3
3.3
Other Services
---
---
---
3.4
0.3
-1.0
1.9
12 Selected industries
4.6
1.9
5.0
3.5
4.1
1.5
3.5
16 Market sector industries
---
---
---
3.6
3.7
1.8
3.6
From
To
2007/08
2010/11
1984/85
2010/11
Adapted from ABS (2012c), Table 8: Gross value added—Chain volume measures. Productivity growth cycles from Table 5: Productivity growth cycles - Selected
industries aggregate. 1985/86-1988/89 and 2007/08-2010/11 are partial cycles. Totals for 12 industries based on those industries for which there were estimates
in 1984/85-1988/89 and totals for 16 industries based on all industries listed in the table. Means for the additional four industries are from 1995/96.
5.2 The transport industry, productivity and productivity growth
This section includes six tables that provide industrylevel information on six elements of measures of
productivity growth:
®®
gross value added (GVA)
®®
hours of work (unadjusted)
®®
capital services
®®
labour productivity
®®
capital productivity
®®
multifactor productivity (MFP).
Gross value added is the measure of output in constant
basic prices; hours of work and capital services are the
measures of labour and capital inputs; labour productivity
is the change in output from year to the next that cannot
be explained by changes in labour inputs, capital
productivity is the change in output from one year to the
next that cannot be explained by changes in the amount
of productive capital used to produce that output; and
multifactor productivity is the change in output that
cannot be explained by changes in either the number of
hours of work or the amount of productive capital used to
produce that output.
The tables contain information on average annual
changes from 1985-86 to 2010-11. Results for the period
are presented for six productivity cycles, usually of four
to five years each. Productivity cycles are calculated as
the years between peaks in productivity—those years
where the level of multifactor productivity achieves a
local high value above a calculated trend. Presentation of
results for these periods is intended to remove any effect
of the business cycle on comparisons. Two cycles may
be incomplete—the first, 1985-86 to 1988-89, because
estimates were not available for earlier years, and the
most recent, 2007-08 to 2010-11 because the cycle itself
may not be complete yet. Hence care should be taken
when interpreting values for these two cycles.
Each table contains values for 16 market industries
(that is, those industries where goods and services
are freely traded and where market prices can be
more readily established) as well as totals for 12
of those industries and totals for all 16 industries.
Estimates were not available over the full period for
all sixteen industries. Hence when the commentary
refers to the market economy, it is the total for only
12 industries that is intended. The results are derived
from the ABS’s Experimental estimates of industry
multifactor productivity.
The following discussion focuses on the Transport,
Postal, Warehousing industry and comparisons
between that industry and the averages for the 12
market industries. References to the Transport industry
are to the broader ANZSIC category.
5 | industry comparisons
Table 10
Average annual growth in hours worked by industry
and productivity growth cycles, Australia, 1985-86 to 2010-11 (%)
Industries
Productivity growth cycles
From
To
1985/86
1988/89
1988/89
1993/94
1993/94
1998/99
1998/99
2003/04
Mean
2003/04
2007/08
2007/08
2010/11
1984/85
2010/11
Agriculture
-0.2
-1.5
0.1
-3.0
-0.6
-0.6
-1.1
Mining
0.5
-0.4
-1.2
2.3
10.4
12.6
3.4
Manufacturing
2.7
-1.6
0.1
-1.2
0.3
-2.4
-0.5
Utilities
-5.2
-3.1
-3.8
3.5
6.1
9.3
0.8
Construction
6.4
-0.3
3.1
4.3
5.4
1.8
3.3
Wholesale
4.7
1.4
-0.5
0.5
0.6
1.7
1.1
Retail
2.9
0.0
1.6
2.5
3.0
-1.3
1.5
Accommodation & Food
6.1
2.2
3.6
1.9
0.9
1.6
2.6
Transport, Postal, Warehousing
0.9
0.3
2.7
1.1
3.1
1.3
1.6
Information, Media, Telecom
0.9
-0.5
1.1
2.6
1.5
-2.7
0.7
Finance & Insurance
5.2
-1.4
1.1
1.4
3.5
0.1
1.4
Rental, Hiring, Real Estate
---
---
---
5.2
2.2
1.2
2.8
Professional, Scientific, Technical
---
---
---
1.7
5.3
2.8
3.8
Admin., Support services
---
---
---
2.7
-0.6
4.5
3.1
Arts, Recreation Services
4.4
3.5
4.3
1.1
6.3
1.4
3.5
Other Services
---
---
---
1.0
1.7
-0.6
0.9
12 Selected industries
2.9
-0.5
1.2
1.0
2.5
0.5
1.2
16 Market sector industries
---
---
---
1.2
2.6
0.8
1.5
Adapted from ABS (2012c), Table 8: Hours worked indexes. Productivity growth cycles from Table 5: Productivity growth cycles - Selected industries aggregate.
1985/86-1988/89 and 2007/08-2010/11 are partial cycles. Totals for 12 industries based on those industries for which there were estimates in 1984/85-1988/89
and totals for 16 industries based on all industries listed in the table. Means for the additional four industries are from 1995/96.
Gross value added by the Transport industry has
grown at about the same rate as that of the market
economy. Gross value added by the Transport, Postal
and Warehousing industry grew at 3.6 per cent per year
from 1985-86 to 2010-11, which was just slightly higher
than for the market economy overall, for which GVA
increased by 3.5 per cent per year (Table 9). During
that time, gross value added grew substantially more
quickly in the Finance (6.4 per cent) and Information
Technology industries (6.1 per cent) and more slowly in
Manufacturing (1.4 per cent), Utilities (2.0 per cent) and
Accommodation and Food (2.9 per cent).
Gross value added by the Transport industry has
grown more quickly than the average for the
market economy over the last decade. The last
three productivity cycles from 1998-99 have seen a
somewhat higher relative average annual increase
in gross value added by the Transport industry—4.0
per cent for Transport compared with 3.5 per cent
for the market economy for 1998-99 to 2003-04, 5.0
per cent compared with 4.1 per cent for 2003-04 to
2007-08, before returning closer to the average, 1.6 per
cent compared with 1.5 per cent. In the most recent
productivity cycle, with the breaking of the drought,
Agriculture (8.5 per cent has shown strong growth in
GVA, along with Construction, while Manufacturing
(-1.5 per cent) and Accommodation and Food (-1.4 per
cent had lower growth because of the high Australian
dollar.
Hours of work in Australia’s Transport industry have
grown more than for the market economy overall.
The number of hours worked in the Transport, Postal and
Warehousing industry increased at about 1.6 per cent
per year from 1985-86 to 2010-11 (Table 10). For the
market economy (defined by the 12 industries for which
estimates are available) hours of work grew at about 1.2
per cent per year. Over that period, there was a shift of
working hours away from Agriculture (-1.1 per cent) and
Manufacturing (-0.5 per cent) in particular towards Arts
and recreation services (3.5 per cent, Mining (3.4 per
cent) and Construction (3.3 per cent), which grew more
quickly than the average.
Growth in hours of work in the Transport industry has
increased in the last decade. The absolute and relative
annual growth in hours worked in the Transport industry
was particularly low in the first productivity cycle (0.9 per
cent compared with 2.9 per cent in 1985-86 to 198889), which lowered the average for the whole period.
By comparison, labour inputs grew particularly strongly
during 2003-04 to 2007-08 (3.1 per cent), but even
so, labour growth in the last decade or so was marked
less than in Mining and Utilities, but more strongly than
for Manufacturing.
Productive capital in the Australian Transport industry has
grown more slowly than for the overall market economy.
Table 11 shows that the amount of productive capital
in the Transport, Postal and Warehousing industry grew
Productivity and productivity growth in the Australian transport and logistics industries
42
Table 11
Average annual growth in capital services indexes by industry
and productivity growth cycles, Australia, 1985-86 to 2010-11 (%)
Industries
Productivity growth cycles
Mean
1985/86
1988/89
1988/89
1993/94
1993/94
1998/99
1998/99
2003/04
2003/04
2007/08
2007/08
2010/11
1984/85
2010/11
Agriculture
0.7
0.0
0.4
0.2
1.6
1.5
0.6
Mining
3.7
2.9
5.3
2.3
8.3
10.9
5.2
Manufacturing
3.9
2.8
3.7
3.4
5.6
1.8
3.6
Utilities
1.3
0.6
2.1
3.7
5.9
5.6
3.1
Construction
10.8
2.7
3.6
3.3
6.3
4.9
4.8
Wholesale
3.8
4.2
4.5
5.2
8.3
3.7
5.0
Retail
5.4
3.1
5.5
5.8
7.0
3.9
5.1
Accommodation & Food
11.7
3.4
5.1
4.5
5.2
1.9
5.1
Transport, Postal, Warehousing
3.7
2.4
2.2
4.1
6.3
4.8
3.8
Information, Media, Telecom
7.0
6.0
8.2
6.8
6.6
3.7
6.5
Finance & Insurance
12.7
5.7
4.6
5.7
4.4
2.2
5.7
Rental, Hiring, Real Estate
---
---
---
8.6
11.5
6.6
8.8
Professional, Scientific, Technical
---
---
---
10.4
11.0
6.4
10.7
Admin., Support services
---
---
---
10.3
8.6
5.1
10.6
Arts, Recreation Services
9.3
5.0
9.3
5.8
5.7
3.7
6.5
Other Services
---
---
---
10.3
11.5
8.4
10.7
12 Selected industries
4.7
3.0
4.2
4.0
6.2
5.0
4.4
16 Market sector industries
---
---
---
4.4
6.6
5.2
5.2
From
To
Adapted from ABS (2012c), Table 9: Capital services indexes. Productivity growth cycles from Table 5: Productivity growth cycles - Selected industries aggregate.
1985/86-1988/89 and 2007/08-2010/11 are partial cycles. Totals for 12 industries based on those industries for which there were estimates in 1984/85-1988/89
and totals for 16 industries based on all industries listed in the table. Means for the additional four industries are from 1995/96.
by an average of 3.8 per cent per year from 1985-86 to
2010-11 while for the market economy it grew at 4.4 per
cent per year. Productive capital grew more slowly only
in Agriculture, with a very low growth rate of 0.6 per cent,
the Utilities (electricity, gas, water and waste) with 3.1
per cent and Manufacturing (3.6 per cent). Interestingly
Information, Media and Telecommunications (6.5 per
cent) and Finance (5.7 per cent) had growth rates that
were higher than Mining (5.2 per cent).
Growth in productive capital in the Transport industry
has increased in the last decade. The absolute and
relative rates of the formation of productive capital
have varied over the last couple of decades. In more
recent years, growth in productive capital has increased
substantially—from 3.7 per cent, 2.4 per cent and 2.2
per cent per year for the first three productivity cycles
to 1998-99 and then approximately doubled to 4.1 per
cent, 6.3 per cent and 4.8 per cent for the more recent
cycles to close to the average for the market economy.
This higher absolute and relative growth of productive
capital in the Transport industry has only partly mirrored
the very substantial increase in capital formation in the
Mining industry.
Labour productivity in the Transport industry has
grown only slightly more slowly than in the market
economy. Labour productivity in the Transport, Postal
and Warehousing industry increased by about 2.1 per
cent per year from 1985-86 to 2010-11. This was only
slightly lower than for the market economy (defined
by the 12 industries for which estimates are available)
where labour productivity grew by 2.3 per cent per year.
Growth in labour productivity in the Transport
industry has been slowing in recent productivity
cycles. Labour productivity growth in the Transport
industry has been fairly volatile across productivity
cycles, but 0.4 per cent per year in the most recent
productivity cycle is the lowest of the five cycles in
Table 12 and is a somewhat steeper decline from the
preceding cycle than for the whole market economy.
The decline in capital productivity has been
less in the Transport industry than in the market
economy. Capital productivity has declined by an
average of 0.9 per cent per year between 1985 and
2011 but by only 0.2 per year in the Transport, Postal
and Warehousing industry. In fact only Agriculture
and Finance, with growth of 2.8 per cent and 0.7 per
cent per year respectively, had better performance in
capital productivity. Changes in the growth of capital
productivity in the Transport industry have been fairly
volatile, often close to zero, but peaking at 2.3 per cent
per year in the 1993-94 to 1997-98 productivity cycle
and plunging to minus 3.1 per cent per year in the
most recent cycle. These changes have to some extent
reflected the broader changes in the market economy.
Multifactor productivity in the Australian Transport
industry has grown faster in the long run than in
the overall market economy. Table 14 shows that
5 | industry comparisons
Table 12
Average annual growth in labour productivity by industry
and productivity growth cycles, Australia (%), 1985-86 to 2010-11
Industries
Productivity growth cycles
Mean
1985/86
1988/89
1988/89
1993/94
1993/94
1998/99
1998/99
2003/04
2003/04
2007/08
2007/08
2010/11
1984/85
2010/11
Agriculture
1.3
5.2
4.9
6.4
0.6
9.2
4.6
Mining
5.2
5.4
5.4
0.5
-5.2
-8.3
1.1
Manufacturing
2.3
1.7
2.1
3.3
0.9
0.9
2.0
Utilities
9.7
5.8
6.2
-2.0
-4.9
-6.0
1.7
Construction
-1.3
0.3
2.7
1.0
0.9
1.5
1.0
Wholesale
0.9
-1.3
7.3
2.8
2.6
-0.3
2.3
Retail
-1.7
2.5
3.0
2.2
1.3
2.6
1.9
Accommodation & Food
-0.8
-0.4
1.9
1.3
1.4
-3.0
0.3
Transport, Postal, Warehousing
2.8
2.1
1.9
2.9
1.9
0.4
2.1
Information, Media, Telecom
7.3
9.7
7.3
2.0
3.5
4.1
5.7
Finance & Insurance
6.3
7.2
4.7
4.4
4.9
0.8
4.9
Rental, Hiring, Real Estate
---
---
---
-1.9
-2.9
1.0
-0.4
Professional, Scientific, Technical
---
---
---
3.6
-2.5
3.7
1.2
Admin., Support services
---
---
---
0.9
4.2
-4.6
0.4
Arts, Recreation Services
-1.1
-0.8
-0.5
2.8
-2.0
2.0
0.1
Other Services
---
---
---
2.6
-1.2
-0.2
1.1
12 Selected industries
1.7
2.3
3.8
2.5
1.6
1.0
2.3
16 Market sector industries
---
---
---
2.4
1.1
1.0
2.1
From
To
Adapted from ABS (2012c), Table 6: Labour productivity indexes—Value added based measures. Productivity growth cycles from Table 5: Productivity growth
cycles - Selected industries aggregate. 1985/86-1988/89 and 2007/08-2010/11 are partial cycles. Totals for 12 industries based on those industries for which there
were estimates in 1984/85-1988/89 and totals for 16 industries based on all industries listed in the table. Means for the additional four industries are from 1995/96.
multifactor productivity in the Transport, Postal and
Warehousing industry grew by an average of 1.2 per
cent per year between 1985-86 and 2010-11 while it
grew at 0.9 per cent per year in the market economy.
MFP grew more strongly only in Agriculture (3.5 per
cent), Finance (3.0 per cent) and Information, Media
and Telecommunications (2.1 per cent). 2 per cent). In
contrast, multifactor productivity declined in Arts and
Recreation services (-0.9 per cent), Mining (-0.5 per
cent) and Accommodation and Food (-0.1 per cent).
Multifactor productivity in the Transport industry has
declined in the three most recent productivity cycles.
Absolute and relative growth of MFP in the Transport
industry has declined sharply during the current
productivity cycle, falling to minus 1.1 per cent per
year, well below the long-term average of plus 1.2 per
cent. Part of this decline was associated with an overall
decline of MFP in the market economy, but there seems
to be an additional element as MFP growth in Transport
has come back to the average for the market economy.
The recent decline in MFP growth is evident in a
number of industries. Mining stands out with MFP
decline by an astounding 7.5 per cent, 3.6 percentage
points lower than in the preceding period. This decline is
typically attributed to lags between the very high levels of
current investment and the expected future production.
The decline in MFP growth in the Utilities is also very
high, but breaks a long-term decline in the industry, with
the decline slightly lower than in the preceding period.
MFP in Accommodation and Food also fell markedly,
probably reflecting higher vacancy rates with decline of
domestic tourism spurred on by the strong Australian
dollar—minus 3.5 per cent compared with plus 0.4 per
cent in the preceding period. The smaller Administration
and services industry also experienced a decline in MFP
growth (minus 4.7 per cent, down from plus 3.5 per cent
in the preceding cycle). Finance and Insurance, with
MFP growth of only minus 0.2 per cent has experienced
a very large decline from plus 4.5 per cent in the
preceding period and a long-term average of 1.2 per
cent, clearly affected by the GFC. In the context of these
industries, the recent decline in MFP in the Transport
industry is modest (minus 1.1 per cent down from plus
0.7 per cent in the preceding period).
Some industries continue to show growth in MFP.
The change in weather condition saw a stunning
turnaround in the MPF growth in Agriculture, with 7.7
per cent growth compared with minus 1.0 per cent in
the preceding period and a long-term average of 3.5
per cent per year. Less spectacularly, MFP growth in
Retail improved from a very modest 0.3 per cent to
1.1 per cent in the midst of well documented difficult
trading conditions. MFP growth in Construction and
Information technology was modest but stable, while
the small Rental, Hiring and Real Estate industry,
while still exhibiting negative MFP growth in the most
recent period (-1.7 per cent), experienced a substantial
Productivity and productivity growth in the Australian transport and logistics industries
44
Table 13
Average annual growth in capital productivity by industry
and productivity growth cycles, Australia, 1985-86 to 2010-11 (%)
Industries
Productivity growth cycles
Mean
1985/86
1988/89
1988/89
1993/94
1993/94
1998/99
1998/99
2003/04
2003/04
2007/08
2007/08
2010/11
1984/85
2010/11
Agriculture
0.5
3.5
4.5
3.2
-2.0
6.9
2.8
Mining
1.8
1.7
-1.2
0.0
-3.5
-7.3
-1.1
Manufacturing
1.0
-2.7
-1.5
-1.3
-4.3
-3.2
-2.0
Utilities
2.6
1.9
-0.3
-2.3
-4.8
-3.0
-1.0
Construction
-5.3
-2.8
2.2
2.1
0.0
-1.5
-0.5
Wholesale
1.8
-3.9
2.1
-1.8
-4.8
-2.3
-1.6
Retail
-4.0
-0.5
-0.8
-1.1
-2.5
-2.7
-1.7
Accommodation & Food
-5.7
-1.6
0.4
-1.3
-2.8
-3.3
-2.0
Transport, Postal, Warehousing
-0.1
-0.1
2.3
-0.1
-1.2
-3.1
-0.2
Information, Media, Telecom
1.1
3.0
-0.1
-2.6
-1.8
-2.4
-0.4
Finance & Insurance
-0.5
-0.1
1.2
0.2
4.0
-1.2
0.7
Rental, Hiring, Real Estate
---
---
---
-5.1
-11.1
-4.8
-6.2
Professional, Scientific, Technical
---
---
---
-4.6
-7.5
0.2
-5.1
Admin., Support services
---
---
---
-6.2
-4.6
-5.2
-6.5
Arts, Recreation Services
-5.6
-2.9
-5.1
-1.9
-1.5
-0.4
-3.0
Other Services
---
---
---
-6.2
-10.0
-8.6
-7.9
12 Selected industries
-0.1
-1.1
0.8
-0.5
-2.0
-3.3
-0.9
16 Market sector industries
---
---
---
-0.8
-2.7
-3.2
-1.5
From
To
Adapted from ABS (2012c), Table 7: Capital productivity indexes—Value added based measures. Productivity growth cycles from Table 5: Productivity growth
cycles - Selected industries aggregate. 1985/86-1988/89 and 2007/08-2010/11 are partial cycles. Totals for 12 industries based on those industries for which there
were estimates in 1984/85-1988/89 and totals for 16 industries based on all industries listed in the table. Means for the additional four industries are from 1995/96.
improvement from the previous period (minus 6.7 per
cent).
Table 14 has an additional column of results that
show the contribution of the various industries to the
change in 12-industry MFP growth between 2000-04
and 2005-08.
These periods, of course, do not match the productivity
cycles in the table and do not include more recent
estimates. Over that period, Transport contributed
a modest 7 per cent to the decline in MFP growth.
The larger effects are attributed to Manufacturing—
near half (46 per cent) of the decline, reflecting the
more modest decline in MFP growth, but its greater
contribution to gross value added—and Mining,
which contributed more than a third (37 per cent) to
the decline, reflecting the very large decline in MFP
growth, but the somewhat smaller contribution to
GVA. Some values have been superseded by recent
changes—for instance, MFP growth in Manufacturing
has improved; MFP growth in Agriculture, instead
of contributing to the decline (nearly a quarter at
22%) has been strongly positive; while Finance and
Insurance is now contributing to the continuing
decline in MFP growth rather than resisting it.
5 | industry comparisons
Table 14
Average annual growth in multifactor productivity by industry
and productivity growth cycles, Australia, 1985-86 to 2010-11 (%)
Industries
Mean
Share
1985/86
1988/89
1988/89
1993/94
Productivity growth cycles
1993/94
1998/99
1998/99
2003/04
2003/04
2007/08
2007/08
2010/11
1984/85
2010/11
2000-04
2005-08
Agriculture
0.8
4.1
4.7
4.4
-1.0
7.7
3.5
22
Mining
2.8
2.8
0.7
0.1
-3.9
-7.5
-0.5
37
Manufacturing
1.8
0.0
0.6
1.4
-1.4
-0.7
0.3
46
Utilities
6.0
3.5
2.0
-2.2
-4.8
-4.2
0.1
8
Construction
-2.2
-0.5
2.6
1.3
0.7
0.6
0.6
-3
Wholesale
1.3
-2.2
5.4
1.3
0.0
-1.0
0.9
9
Retail
-2.3
1.8
2.1
1.4
0.3
1.1
1.0
12
Accommodation & Food
-1.8
-0.7
1.7
0.8
0.4
-3.0
-0.1
0
Transport, Postal,
Warehousing
1.6
1.3
2.1
1.8
0.7
-1.1
1.2
7
Information, Media, Telecom
4.0
5.8
2.9
-0.9
0.2
0.0
2.1
-5
Finance & Insurance
3.9
4.1
2.9
2.3
4.5
-0.2
3.0
-39
Rental, Hiring, Real Estate
---
---
---
-3.7
-6.7
-1.7
-3.4
---
Professional, Scientific,
Technical
---
---
---
2.9
-3.2
2.9
0.6
---
Admin., Support services
---
---
---
0.5
3.5
-4.7
-0.1
---
Arts, Recreation Services
-2.8
-1.5
-1.8
1.1
-1.8
1.1
-0.9
6
Other Services
---
---
---
0.6
-3.3
-1.7
-0.8
---
12 Selected industries
0.9
0.9
2.5
1.2
0.0
-1.0
0.9
100
16 Market sector industries
---
---
---
1.0
-0.5
-0.9
0.5
---
From
To
Adapted from ABS (2012c), Table 1: Gross value added based multifactor productivity indexes—Chain volume gross value added at basic prices. Productivity
growth cycles taken from Table 5: Productivity growth cycles - Selected industries aggregate. 1985/86-1988/89 and 2007/08-2010/11 are partial cycles. Totals for
12 industries based on those industries for which there were estimates in 1984/85-1988/89 and totals for 16 industries based on all industries listed in the table.
Means for the additional four industries are from 1995/96. Share is the estimated contribution of the industry to the decline in MFPgva growth for the 12 selected
market industries between 2000-2004 and 2005-08 (Parham 2012, Table 1.1, p. 6).
46
5.3 Transport, productivity and productivity growth in other countries
The EU-KLEMS project and database provides industrylevel estimates of gross value added, labour and capital
inputs and total factor productivity for a considerable
number of nations. As a European Union sponsored
project, the focus is mostly on European countries,
but it includes Australia, the USA and Japan, among
several non EU countries. The data are derived mainly
from national statistical bureaux, the OECD and World
Bank and prepared by research partners to ensure
the consistency of measures across countries. As is
common with such enterprises, the length of the time
series and the available estimates vary across countries.
Countries discussed in this section mostly had time
series of similar length to those available for Australia
and more detailed data.
Data from this project permits comparisons across
countries of estimates of total factor productivity growth
for particular industries. The focus here, of course, is on
the Transport and Storage industry.
Comparing Transport and Storage industries, and
hence the productivity growth of Transport and
Storage industries, across countries is a perilous
task. Countries have different mixes of modes of
transport—road, rail, sea and air—which in turn reflect
their different geographies, population distributions
and densities and trade patterns, as well as the
relative importance of Transport and Storage for the
overall economy. Different countries will have different
experiences of productivity and productivity growth
partly because their transport industries are different
and partly because those industries operate within
different economies.
The estimates of productivity growth for Australia
and for other countries may differ in this section
from estimates in other parts of this report because
the estimates are for total factor productivity growth
for the whole economy rather than, for instance, for
multi-factor productivity growth for the market-based
industries. The data for the EU-KLEMS estimates are
ultimately derived from ABS data, but may be adjusted
to improve international comparability. For instance,
industry categories are based on ISIC rather than the
ABS’s ANZSIC.
Before considering the international comparisons, it is
possible to compare absolute levels of labour productivity
(rather than productivity growth) across Australian
industries. Figure 4 provides estimates of gross value
added per hour of work in a number of broadly defined
industries14. These estimates provide an indication of the
absolute level of labour productivity across industries—
something that is not directly available from the standard
ABS indices of productivity growth15.
Value added per hour of labour, as with labour
productivity, is influenced by the other inputs that
are used in the production process. All else equal,
Mining has a very high level of labour productivity
because it is both capital intensive and uses raw
materials. Utilities (power, water and sewerage plants,
among others) are also highly capital intensive. At
the other end of the spectrum, workers in hotels and
restaurants are engaged in relatively labour intensive
industries. The size of the difference among industries
is considerable—an hour’s work in the Mining industry
produces nearly 10 times as much as value added as
an hour’s work in the Hotel and restaurant industry.
14
The values are adapted from Green, Toner and Agarwai (2012). Table 2, p.51. The source provides details about the derivation of the values.
15
Eslake and Walsh (2011). p.20. Eslake & Walsh map estimates from their procedure against growth in labour productivity and find a satisfactory match.
This, of course, is only prima facie evidence of the adequacy of their procedure.
$74
$87
$55
Admin.
& support
$37
$35
$32
$30
Retail
Other services
Accomodation
& food
$43
Health care,
social assist.
Arts & recreation
$46
$52
Education
& training
Construction
$54
$57
Prof., scientific,
technical
Agric., forestry,
fishing
$58
$62
Manufacturing
Public admin.
& safety
$64
All industries
T’port postal,
w’housing
Wholesale
$69
$112
Utilities
Rental, hiring
real estate
$112
Info., Media,
telecom.
Finance,
insurance
Mining
$188
$260
5 | industry comparisons
Figure 4
Gross value added per hour by industry, Australia, 2011
$69
is produced in an
hour of work in gross
value added in 2011.
Productivity and productivity growth in the Australian transport and logistics industries
48
An hour’s work in the Transport and
Storage industry produced about $69
in gross value added in 2011, which
places the industry just above the
average for the Australian economy
($64 per hour).
GVA per hour, however, is only a partial measure. It
does not take into account the capital costs associated
with production. Any attempt to use it as a basis for
workforce planning policies is risky.
Table 15 shows the average total factor productivity
(TFP) growth for the Transport and Storage industry and
for the whole economy for selected (mostly European)
countries for the years 1983 to 2007. Average growth
is shown for five year periods. Context for productivity
growth in the Transport and Storage industry is provided
by productivity growth for the whole economy for
each country.
Although the major point of Table 15 is to provide
comparisons over time of productivity growth in the
Australian Transport and Storage industry with the
Transport and Storage industry in other countries,
Table 15 provides some further information about
productivity growth in Australia overall and compared
with other countries. First the values reiterate the
slowdown of productivity growth in Australia during the
2000s—average annual growth for the five years 2003
to 2007 was negative 0.8 per cent per year compared
with positive 0.5 per cent per annum over the 25 years
1983 to 2007 and was even higher in the mid-1980s
and 1990s. Second, the decline in productivity growth
in Australia to 2007 was not reflected globally in other
countries. Third, over the 25 years, Australia’s average
annual productivity growth was similar to that in the
USA (0.5 per cent), but slightly less than that in Europe
(0.7 per cent) or Japan (0.6 per cent). Fourth, the relative
productivity growth of countries has varied over time,
with Australia having higher levels of productivity growth
than other countries or regions for some periods. As
with many time series, the conclusions that emerge can
depend on the start and end years chosen (or available)
for the series. Hence caution is always required when
making such comparisons.
Several features about Australia’s Transport and Storage
industry emerge from Table 15:
®®
®®
®®
®®
Average productivity growth in Australia’s Transport
and Storage industry has generally been higher
than for the whole economy over the 25 years from
1983 to 2007—1.0 per cent per year compared with
0.5 per cent per year for the whole economy. The years
2003 to 2007 were an exception, with productivity
growth falling more rapidly (minus 5.2 per cent per
year) than for the whole economy (minus 0.8 per cent
per year).
Average productivity growth in the Transport
and Storage industry was generally higher than
productivity growth in the whole economy for most
countries for most periods in Table 15.
Average productivity growth in Australia’s Transport
industry has been lower than the productivity
growth in the Transport industries of most of the
other countries in Table 15 over the 25 years from
1983 to 2007—1.0 per cent per year in Australia
compared with 2.0 per cent per year in the USA, 1.6
per cent per year in Europe and 1.4 per cent per year
in Japan. Productivity growth Germany and France, in
particular, was 3.0 per cent per year.
Productivity growth was not consistently lower
in the Australian industry than in other countries
over the longer period. For instance in 1983-87
it (3.6 per cent) was substantially higher than in
European Union (1.9 per cent) and in 1993-97 (2.7%) it
was substantially stronger than in the USA (0.6%).
5 | industry comparisons
Table 15
Annual total factor productivity growth, Transport and Storage
industry and whole economy, selected countries, 1983-2007 (%)
Industries
1983
- 87
Australia
3.6
1988
- 92
1.4
Transport & Storage
1993
1998
2003
- 97
- 02
- 07
2.7
2.4
-5.2
1983
- 07
1983
- 87
1988
- 92
Whole economy
1993
1998
- 97
- 02
2003
- 07
1983
- 07
1.0
1.4
0.4
0.9
-0.8
0.5
0.5
Belgium
0.1
8.6
-1.3
-1.0
0.5
1.4
0.7
0.1
0.0
-0.5
0.1
0.1
France
2.6
3.4
3.0
3.1
2.7
3.0
1.1
0.9
0.4
0.9
0.5
0.8
Germany
---
0.0
6.1
1.4
2.1
3.0
---
0.5
0.9
0.3
0.8
0.7
Italy
0.5
3.1
3.0
0.0
-1.0
1.1
0.9
0.9
1.0
-0.3
-0.3
0.4
Japan
2.3
3.2
0.9
0.4
-0.0
1.4
1.3
1.4
-0.0
-0.4
0.7
0.6
Netherlands
1.2
1.3
1.9
0.6
2.1
1.4
1.0
0.3
0.4
0.2
1.1
0.6
Sweden
---
---
1.9
-1.9
-0.1
-0.2
---
---
0.7
0.8
1.0
0.8
UK
4.4
0.1
3.6
1.4
1.4
2.2
1.5
0.3
1.0
0.0
0.7
0.7
USA
3.9
3.1
0.6
-0.4
2.8
2.0
1.0
0.4
-0.1
0.4
0.9
0.5
EU
1.9
2.0
3.0
0.4
0.8
1.6
1.1
0.8
0.7
0.2
0.5
0.7
EU includes European Union countries for which estimates were available: Austria, Belgium, Denmark, Spain, Finland, France, Germany, Italy, Netherlands & UK.
Values for Australia were available for all five years of each period. Values for some countries were available for only some years at the start of their series and in
some instances were not available for 2007. Transport & Storage in defined by ISIC, TFP for whole economy.
Productivity and productivity growth in the Australian transport and logistics industries
50
Tables and figures
Table 1
18
Annual productivity growth in the
market economy, Australia, 1995-2011 (%)
Table 2
24
30
Measures of total factor productivity,
selected countries, 2007
Table 4
Labour productivity growth by selected
countries, 1990-92, 1999-01, 2009-11
Table 5
32
Table 6
36
Enrolments in VET courses by course occupation:
TLISC training packages, 2010
Table 7
36
Selected TLISC occupations by industry,
Australia 2006 (%)
Table 8
40
42
Table 10
Table 15
50
Annual total factor productivity growth,
Transport and Storage industry and whole
economy, selected countries, 1983-2007 (%)
Figure 1
Figure 2
18
42
20
Annual changes in gross value added per
paid hour of work in the market economy,
Australia, 1995-96 to 2011-12 (%)
Figure 3
Average annual growth in gross value
added by industry and productivity growth
cycles, Australia, 1985-86 to 2010-11 (%)
Average annual growth in hours worked
by industry and productivity growth cycles,
Australia, 1985-86 to 2010-11 (%)
46
Average annual growth in multifactor productivity
by industry and productivity growth cycles,
Australia, 1985-86 to 2010-11 (%)
Annual productivity growth in the
market economy, Australia, 1995-2011 (%)
ANZSIC divisions by market status and
availability of productivity growth estimates
Table 9
46
Average annual growth in capital productivity
by industry and productivity growth cycles,
Australia, 1985-86 to 2010-11 (%)
Table 14
Multifactor productivity growth
by selected countries, 1986-88, 1996-98, 2006-08
44
Average annual growth in labour productivity
by industry and productivity growth cycles,
Australia (%), 1985-86 to 2010-11
Table 13
32
44
Average annual growth in capital services
indexes by industry and productivity growth
cycles, Australia, 1985-86 to 2010-11 (%)
Table 12
Sources of annual output growth,
Australia 1995-96 to 2010-11(%)
Table 3
Table 11
24
Annual growth in gross value added,
labour and capital inputs and multifactor
productivity in the market economy,
Australia, 1995-2011 (%)
Figure 4
Gross value added per hour by industry, Australia, 2011
48
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Productivity and productivity growth in the Australian transport and logistics industries
52
in the australian transport and logistics industries
Transport & Logistics
Industry Skills Council
P: 03 9604 7200
F: 03 9629 8903
E: enquiries@tlisc.org.au
tlisc.org.au
Ce ntre for the Economics of Education and Tra i n i n g
Fa c u l t y o f E d u c a t i o n , Mo n a s h U n i v e r s i t y