Fri Sep 23

fixing inequality is the key to productivity

Written by Jenny Gordon, Honorary Professor, Centre for Social Research and Methods, Australian National University

Every five years the Productivity Commission is charged with examining everything that can be done to lift Australia’s productivity.

Its first interim report ^[1] in the current inquiry, issued well ahead of its final report due in February, proposes action on innovation, digital technologies and data and cyber-security, a productivity-friendly business environment, and a skilled and educated workforce.

But it doesn’t propose anything to address inequality.

Productivity Commission ^[2] What it doesn’t consider is the possibility that reducing inequality might be necessary to boost productivity – by improving the quality of our workforce and our institutions. Productivity increases when you produce the same things with fewer inputs, or produce more (either quantity or quality) with the same inputs. At the scale of the Australian economy, productivity is increased if we better use our human resources. And disadvantage reduces people’s capability to be properly used in the workforce. Workers without foundational numeracy and literacy skills are less useful, particularly for work involving digital technologies of the kind that is becoming more ubiquitous. Inequality makes people less economically useful Our highly segregated ^[3] school system, which concentrates disadvantage, means many students from disadvantaged backgrounds don’t have the peers that would support them to aim for highly productive jobs. Leaving a substantial share of workers without the ability to do more productive work acts as a drag on productivity growth. In its interim report the Commission continues its tradition of advocating light-handed regulation of businesses in order to lower compliance costs. Its motivation is to make it easier for new businesses to enter markets and improve competition. But it pays less attention to the reasons for regulations. Better regulation, not less regulation Regulations are needed to protect consumers, workers and the planet by making products, workplaces and the environment safer. They matter more for people who are disadvantaged and find it hard to take action to protect their rights. This means the solution is not necessarily less, but better regulations that better protect those least able to protect themselves. Read more: What is productivity, and how well does it measure what we do?^[4] Regulations that purport to treat people (or businesses) equally implicitly assume they have similar needs and capabilities. Disadvantage can mean they do not. As an example, it is often the poor who are most exposed to workplace and environmental hazards. Good regulations take account of the way in which different groups are affected. Productivity is not everything. What matters most is ensuring everybody has the opportunity to lead a good life – not only for its own sake, but also because where this opportunity is withheld, social stability is at risk. People who do not benefit from a system are less likely to respect the rules and norms that make it work. Fighting disadvantage can pay off And how well off we are is not only determined by how well we produce things but also by whether they are the things we value. As an example, while better-performing justice, health and defence systems are better than worse-performing ones, reducing the need to use those systems by reducing the problems they deal with is even better. Investments that reduce disadvantage are likely to boost productivity over the long term, a concept acknowledged by the International Monetary Fund ^[5] and the OECD ^[6], and one the Commission ought to pay more attention to in its final report. References^{^} interim report (www.pc.gov.au)^{^} Productivity Commission (www.pc.gov.au)^{^} highly segregated (www.theguardian.com)^{^} What is productivity, and how well does it measure what we do? (theconversation.com)^{^} International Monetary Fund (www.imf.org)^{^} OECD (www.oecd.org)

fixing inequality is the key to productivity

The Fears Australians Have About Getting Involved With Cryptocurrency

The Evolution of Retail: From Bricks and Mortar to Online — What’s Next?

Big batteries are now outcompeting gas in the grid – and gas-rich Western Australia is at the forefront

The social media ban is just the start of Australia’s forthcoming restrictions – and teens have legitimate concerns

Politicians bank on people not caring about democracy – but research shows we do

Making conveyancing in the home loan process simple

Times Magazine

Freak Weather Spikes ‘Allergic Disease’ and Eczema As Temperatures Dip

IPECS Phone System in 2026: The Future of Smart Business Communication

With Nvidia’s second-best AI chips headed for China, the US shifts priorities from security to trade

Navman MiVue™ True 4K PRO Surround honest review

Australia’s supercomputers are falling behind – and it’s hurting our ability to adapt to climate change

Australia’s electric vehicle surge — EVs and hybrids hit record levels

The Times Features

The Fears Australians Have About Getting Involved With Cryptocurrency

The Quintessential Australian Road Trip

Fitstop Just Got a New Look - And It’s All About Power, Progress and Feeling Strong

What We Know About Zenless Zone Zero 2.6 So Far

For Young People, Life Is an All-New Adventure. For Older People, Memories of Good Times and Lost Friends Come to Mind

Single and Ready to Mingle – the Coffee Trend Australians Can Expect in 2026

The Evolution of Retail: From Bricks and Mortar to Online — What’s Next?

How hot is too hot? Here’s what to consider when exercising in the heat

Vendor Advocacy Fees