1 00:00:03,480 --> 00:00:05,880 Speaker 1: Welcome to Ask Fear and Greed, where we take your 2 00:00:05,960 --> 00:00:08,760 Speaker 1: questions and do our best to answer them. I'm Michael Thompson, 3 00:00:08,800 --> 00:00:10,559 Speaker 1: and good afternoon, Sean Aylmer. 4 00:00:10,920 --> 00:00:12,880 Speaker 2: Good afternoon, Michael, Sean. 5 00:00:12,960 --> 00:00:16,360 Speaker 1: Today's question has come from Andy and he has centered 6 00:00:16,400 --> 00:00:18,720 Speaker 1: in via the website. He's going to Fearangreed dot com 7 00:00:18,760 --> 00:00:21,480 Speaker 1: dot au and he can do it there or Instagram 8 00:00:21,600 --> 00:00:24,800 Speaker 1: or LinkedIn or Facebook or anywhere. Really, and Andy says 9 00:00:24,840 --> 00:00:27,680 Speaker 1: to us, he goes, Hi, gents, I work very hard. 10 00:00:28,040 --> 00:00:31,960 Speaker 1: You work very hard. Pretty much everyone I know works 11 00:00:32,200 --> 00:00:35,239 Speaker 1: very hard. And would you just go because you disagree 12 00:00:35,280 --> 00:00:36,440 Speaker 1: with the premise of his question? 13 00:00:37,120 --> 00:00:40,040 Speaker 2: No, no, no, no, I know I totally agree with handy. 14 00:00:40,240 --> 00:00:44,840 Speaker 1: Okay, good, good, good. Anyway, as he says, everyone's working hard, 15 00:00:44,920 --> 00:00:50,440 Speaker 1: super hard. Can you tell me why Australia's productivity levels 16 00:00:50,720 --> 00:00:53,200 Speaker 1: are considered very low? Please? 17 00:00:54,560 --> 00:00:56,640 Speaker 2: The mysterious world of productivity? 18 00:00:57,880 --> 00:00:59,920 Speaker 1: Would you say, the exciting world of productivity? 19 00:01:00,120 --> 00:01:00,320 Speaker 2: Oh? 20 00:01:00,400 --> 00:01:03,720 Speaker 1: Absolutely, It's a fascinating thing, isn't it. 21 00:01:03,720 --> 00:01:07,960 Speaker 2: It's incredibly hard to measure, that's the funny thing about it. 22 00:01:08,000 --> 00:01:11,720 Speaker 2: So there's two types of productivity. There's labor productivity basically 23 00:01:11,800 --> 00:01:16,240 Speaker 2: output per worker or put our work and so if 24 00:01:16,319 --> 00:01:18,880 Speaker 2: you've got a work who's got higher skills or can 25 00:01:19,040 --> 00:01:23,839 Speaker 2: use AI really well to create a content or something 26 00:01:23,880 --> 00:01:28,760 Speaker 2: like that, or there's good management practices that can improve 27 00:01:28,840 --> 00:01:33,800 Speaker 2: labor productivity. So that's that. There's multi factor productivity, which 28 00:01:34,120 --> 00:01:37,160 Speaker 2: is sort of output per unit of combined inputs. So 29 00:01:37,640 --> 00:01:40,720 Speaker 2: it's not it is labor, but it's also labor end capital. 30 00:01:40,959 --> 00:01:43,800 Speaker 2: It's the whole lot. So that's how you think about it. 31 00:01:44,000 --> 00:01:47,640 Speaker 2: ABS calculates productivity by adding up all the value of 32 00:01:47,680 --> 00:01:50,880 Speaker 2: the goods and services produced in a given time period, 33 00:01:51,320 --> 00:01:54,760 Speaker 2: puts that on top of all the value of labor 34 00:01:54,800 --> 00:01:58,520 Speaker 2: and capital. Then they multiply that by one hundred and 35 00:01:58,600 --> 00:02:01,400 Speaker 2: you end up with a productivity number. Now the numbers 36 00:02:01,400 --> 00:02:05,160 Speaker 2: are indexess, so they're not literally saying that is five 37 00:02:05,240 --> 00:02:08,040 Speaker 2: hundred billion dollars worth of value. It's an index over 38 00:02:08,160 --> 00:02:12,519 Speaker 2: time for outputs and inputs. They do that if in 39 00:02:12,639 --> 00:02:15,080 Speaker 2: year one you've got output of one hundred, input of 40 00:02:15,080 --> 00:02:17,120 Speaker 2: one hundred, one hundred and one hundred equurs one times 41 00:02:17,120 --> 00:02:20,639 Speaker 2: by one hundred, you've got the multi factor of productivity 42 00:02:20,800 --> 00:02:23,680 Speaker 2: is one hundred. Got that year two output of one 43 00:02:23,760 --> 00:02:25,960 Speaker 2: hundred and seven input one hundred and five like costs 44 00:02:25,960 --> 00:02:27,679 Speaker 2: have gone up a bit one hundred and seven and 45 00:02:27,680 --> 00:02:30,320 Speaker 2: one hundred and five times one hundred, that's one hundred 46 00:02:30,320 --> 00:02:31,720 Speaker 2: and one point nine. So you've gone from one hundred 47 00:02:31,800 --> 00:02:33,920 Speaker 2: to one hundred and one point nine. That one point 48 00:02:34,000 --> 00:02:37,040 Speaker 2: nine is what the productivity rate is. 49 00:02:38,680 --> 00:02:43,560 Speaker 1: You know what, Sean, I think. I think we are 50 00:02:43,600 --> 00:02:47,639 Speaker 1: on the verge of a very niche form of podcasting here, which. 51 00:02:47,440 --> 00:02:50,840 Speaker 2: Is explaining economic concepts. 52 00:02:50,440 --> 00:02:58,640 Speaker 1: Explaining economic concepts using mathematical equations, yes, which which it 53 00:02:58,760 --> 00:03:01,079 Speaker 1: can probably be a little bit hard to follow when 54 00:03:01,120 --> 00:03:02,119 Speaker 1: it's just audio. 55 00:03:01,960 --> 00:03:05,680 Speaker 2: Yeah right, yeah, Yeah. Basically the bottom line of that 56 00:03:05,840 --> 00:03:07,720 Speaker 2: is like, you know, output per unit of input. 57 00:03:08,360 --> 00:03:11,280 Speaker 1: Okay, So the thing is it actually does come down. 58 00:03:11,520 --> 00:03:13,280 Speaker 1: The thing that surprises me is that it actually does 59 00:03:13,320 --> 00:03:17,040 Speaker 1: come down to quite a mathematical process when it feels 60 00:03:17,080 --> 00:03:20,800 Speaker 1: like it's something that is almost almost kind of intangible 61 00:03:20,840 --> 00:03:22,680 Speaker 1: and really quite difficult to measure. 62 00:03:23,280 --> 00:03:27,000 Speaker 2: Yeah, I mean, I totally agree with that. You sort 63 00:03:27,040 --> 00:03:29,360 Speaker 2: of need a number. You have to get your mind 64 00:03:29,400 --> 00:03:31,799 Speaker 2: around it somehow. What we do know is that it's 65 00:03:31,800 --> 00:03:36,040 Speaker 2: a good thing. So if we're more productive, more output 66 00:03:36,240 --> 00:03:40,600 Speaker 2: per unit of input, people could should get paid more. 67 00:03:41,000 --> 00:03:43,760 Speaker 2: For example, you know, a company makes more profit. It 68 00:03:43,800 --> 00:03:45,840 Speaker 2: probably takes some of it, but it also pays its 69 00:03:45,840 --> 00:03:48,720 Speaker 2: workers more. That's a really good thing. It can result 70 00:03:48,760 --> 00:03:51,760 Speaker 2: in lower prices because when you're getting more output for 71 00:03:51,840 --> 00:03:55,360 Speaker 2: the same amount of input, when you're being productive, that 72 00:03:55,520 --> 00:03:57,600 Speaker 2: means that you don't have to charge as much for prices. 73 00:03:57,760 --> 00:04:01,080 Speaker 2: And all this whole push about inflation saying productivity is 74 00:04:01,080 --> 00:04:04,680 Speaker 2: the reason inflation isn't coming down, it's kind of I mean, 75 00:04:05,320 --> 00:04:10,040 Speaker 2: arguably it is correct because if without productivity, you're not 76 00:04:10,160 --> 00:04:13,680 Speaker 2: making more goods, and so you know, costs are going up, 77 00:04:13,680 --> 00:04:16,560 Speaker 2: but you're not making more goods. So is you know 78 00:04:16,760 --> 00:04:19,960 Speaker 2: you can pay more workers, earn more profits, prices come down. 79 00:04:20,080 --> 00:04:22,960 Speaker 2: It boosts economic growth. I mean fundamentally, if you want 80 00:04:23,000 --> 00:04:27,800 Speaker 2: to improve living standards in this country, you get productivity going. 81 00:04:28,720 --> 00:04:33,200 Speaker 1: Okay, I understand then the principle of kind of why 82 00:04:33,279 --> 00:04:34,960 Speaker 1: it is so important and why it is good for 83 00:04:35,000 --> 00:04:38,400 Speaker 1: the economy to really have this focus on productivity. What 84 00:04:38,520 --> 00:04:43,240 Speaker 1: about Australia specifically kind of and that kind of goes 85 00:04:43,279 --> 00:04:46,080 Speaker 1: back to Andre's question of kind of everyone seems to 86 00:04:46,120 --> 00:04:50,520 Speaker 1: be working so hard, Why does everyone keep talking about 87 00:04:50,520 --> 00:04:52,480 Speaker 1: our productivity being relatively low? 88 00:04:53,480 --> 00:04:57,839 Speaker 2: Yeah, so there's no clear answer on that. There are 89 00:04:57,880 --> 00:05:00,960 Speaker 2: a few reasons that it could be. So there's been 90 00:05:00,960 --> 00:05:04,440 Speaker 2: a jump in jobs and immigration that actually works against 91 00:05:04,560 --> 00:05:08,280 Speaker 2: productivity growth because the inputs is the bottom number. So 92 00:05:08,520 --> 00:05:10,960 Speaker 2: when you've got more people and we have low unemployment rate, 93 00:05:11,360 --> 00:05:16,279 Speaker 2: that works against productivity growth. Over many years, there's probably 94 00:05:16,360 --> 00:05:19,000 Speaker 2: been a lack of business investment in Australia in things 95 00:05:19,080 --> 00:05:22,520 Speaker 2: like technology. And if you invest in technology, it's not 96 00:05:22,560 --> 00:05:25,080 Speaker 2: like next week your productivity is going to go through 97 00:05:25,080 --> 00:05:28,279 Speaker 2: the roof. By the time you implement it get people trained, 98 00:05:28,440 --> 00:05:31,080 Speaker 2: it can take six months, twelve months, two years, five years. 99 00:05:31,320 --> 00:05:32,920 Speaker 2: We haven't had a lot of investment in that sort 100 00:05:32,920 --> 00:05:35,400 Speaker 2: of stuff and so that's hurt us as well. We've 101 00:05:35,440 --> 00:05:39,720 Speaker 2: also got a really large public sector, the bureaucracy, and 102 00:05:39,760 --> 00:05:44,719 Speaker 2: that can hurt productivity because generally, generally care. 103 00:05:44,640 --> 00:05:46,520 Speaker 1: Exactly a lot of public servants listening to a. 104 00:05:46,560 --> 00:05:50,880 Speaker 2: Show, Generally the private sector is more productive than the 105 00:05:50,920 --> 00:05:54,240 Speaker 2: public sector. Related to that, and I'm going to get 106 00:05:54,279 --> 00:05:57,160 Speaker 2: myself into trouble here, Australia also has a lot more 107 00:05:57,240 --> 00:06:01,359 Speaker 2: service jobs nowadays than they did. Say you think of 108 00:06:01,440 --> 00:06:04,760 Speaker 2: like government funded roles like aged care, that's where all 109 00:06:04,760 --> 00:06:08,400 Speaker 2: the employment growth has been it's really hard to use 110 00:06:08,440 --> 00:06:12,760 Speaker 2: technology to get as big an improvement in aged care. 111 00:06:12,880 --> 00:06:14,960 Speaker 2: You still need someone to look after my ninety three 112 00:06:15,040 --> 00:06:15,520 Speaker 2: year old mum. 113 00:06:15,880 --> 00:06:18,440 Speaker 1: Yeah, yeah, it's still very manual that it's still very 114 00:06:18,480 --> 00:06:20,680 Speaker 1: hands on and there's only so much faster you're going 115 00:06:20,720 --> 00:06:23,080 Speaker 1: to be able to get at every individual task. 116 00:06:23,200 --> 00:06:26,160 Speaker 2: That kind of that's right, and that's where all our 117 00:06:26,240 --> 00:06:28,080 Speaker 2: jobs growth has been in a lot of those sorts 118 00:06:28,080 --> 00:06:31,240 Speaker 2: of areas. Also, the pandemic didn't help. Work from home 119 00:06:31,360 --> 00:06:34,719 Speaker 2: is probably still problematic. So there's a bunch of reasons. 120 00:06:35,320 --> 00:06:37,080 Speaker 2: The other one which people always talk about is less 121 00:06:37,120 --> 00:06:40,839 Speaker 2: business dynamism. So in a country like Australia where you 122 00:06:40,880 --> 00:06:45,560 Speaker 2: have two airlines, really you have two three major telephone operators, 123 00:06:45,560 --> 00:06:48,800 Speaker 2: I suppose you've got four banks. When you don't, when 124 00:06:48,839 --> 00:06:52,400 Speaker 2: you have oligopolies rather than full competition, those companies don't 125 00:06:52,440 --> 00:06:55,680 Speaker 2: need to be as innovative as let's say in the US, 126 00:06:56,120 --> 00:06:58,880 Speaker 2: where you know, to actually keep going, you really got 127 00:06:58,920 --> 00:07:01,760 Speaker 2: to be innovative, and so that means in Australia you 128 00:07:01,760 --> 00:07:02,880 Speaker 2: can be a bit less productive. 129 00:07:04,279 --> 00:07:09,560 Speaker 1: Well, Sean, that was a it's a very comprehensive answer. 130 00:07:11,680 --> 00:07:15,120 Speaker 2: That's that's how you said that that was really dull. 131 00:07:15,200 --> 00:07:18,880 Speaker 1: But no, it actually was. It looked to be fair. 132 00:07:19,000 --> 00:07:20,680 Speaker 1: If I'm going to be honest, because I like to 133 00:07:20,720 --> 00:07:24,480 Speaker 1: be honest, there were some dull moments at the stuff, 134 00:07:24,920 --> 00:07:26,400 Speaker 1: and it was it was when you were going to 135 00:07:26,400 --> 00:07:29,920 Speaker 1: matter mathematics and I've got it. I've got to reveal this. 136 00:07:30,720 --> 00:07:32,520 Speaker 1: You would have seen me looking at my watch while 137 00:07:32,560 --> 00:07:34,840 Speaker 1: you were doing it. It was because my Apple watch 138 00:07:35,160 --> 00:07:37,600 Speaker 1: popped up with a message. And I don't know how 139 00:07:37,640 --> 00:07:40,280 Speaker 1: this happened. I must have triggered Siri or something while 140 00:07:40,280 --> 00:07:42,760 Speaker 1: you were talking, and it popped up with a question 141 00:07:42,920 --> 00:07:46,239 Speaker 1: and it said do you actually know what you're talking about? 142 00:07:49,480 --> 00:07:52,560 Speaker 1: And I don't know why it said this, but I 143 00:07:52,600 --> 00:07:55,840 Speaker 1: took it quite personally. But overall, I think we've answered 144 00:07:55,840 --> 00:07:59,320 Speaker 1: the question. I think particularly the worst trials. Yeah, but 145 00:07:59,560 --> 00:08:02,000 Speaker 1: I think as you apply it to Australia, that's kind 146 00:08:02,040 --> 00:08:04,960 Speaker 1: of the the I suspect the mechanic for working for 147 00:08:05,040 --> 00:08:07,480 Speaker 1: calculating productivity is always going to be a little bit 148 00:08:07,560 --> 00:08:09,600 Speaker 1: opaque to a lot of people if you're not an economist, 149 00:08:09,800 --> 00:08:13,480 Speaker 1: but understanding kind of how it applies to Australia, and 150 00:08:13,520 --> 00:08:15,400 Speaker 1: in particular the growth of the public sector and the 151 00:08:15,440 --> 00:08:17,960 Speaker 1: growth of those services jobs. We cannot actually do much 152 00:08:18,000 --> 00:08:20,320 Speaker 1: more to improve productivity. I think that is really where 153 00:08:20,360 --> 00:08:24,840 Speaker 1: the answer to this question lies. So well done, Thank you, 154 00:08:25,400 --> 00:08:28,120 Speaker 1: Well done to Andy for asking a question that thank 155 00:08:28,160 --> 00:08:31,600 Speaker 1: you and such a journey. Thank you Andy for sending 156 00:08:31,640 --> 00:08:33,120 Speaker 1: in the question. If you've got your own question that 157 00:08:33,160 --> 00:08:35,040 Speaker 1: you would like to ask, then please send it on 158 00:08:35,080 --> 00:08:37,080 Speaker 1: through via the website Fear and Greed dot com today 159 00:08:37,200 --> 00:08:40,439 Speaker 1: you or go to Facebook, LinkedIn Instagram send it through there. 160 00:08:40,480 --> 00:08:41,840 Speaker 1: We'll pop it on the list and we'll get to 161 00:08:41,880 --> 00:08:45,040 Speaker 1: what asap. Thank you very much for listening. Oh Michael 162 00:08:45,080 --> 00:08:47,000 Speaker 1: Thompson and this is ask Fear and Greed.