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The Forum > Article Comments > Gains from reform > Comments

Gains from reform : Comments

By Dean Parham, published 24/11/2005

Dean Parham argues economists' claims that Australia's productivity miracle is over are untrue.

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Shonga, apologies for not responding earlier to your query. There's probably something to the argument that increased working hours have contributed to the faster rate of growth in output (GDP) per person employed. Full-time employees worked an average of 40.6 hours per week in 2004-05, up from 39.6 at the comparable stage of the previous cycle in 1989-90, though down from a peak of 41.5 in 1999-2000. Of course since 'labour productivity' is more commonly defined as output hour worked, whatever increase in that measure of productivity has occurred cannot have been caused by longer working hours.

The 'quality' of management is harder to measure - although in the sense that a manager's job is efficiently to combine labour, capital and technology to produce whatever output s/he is responsible for, it might be argued that the improved rate of 'multi-factor productivity' which Dean Parham has documented elsewhere is (at least in part) the result of an improvement in managerial competence. One of the purported benefits of increasing the exposure of Australian firms to domestic and international competition is that it sharpens the incentives facing managers to improve the way in which they manage (or for them to be replaced if they don't).

Australian managers do seem rather prone to adapting the latest consultant-driven 'fads'. I've observed in my own experience and from hearing or reading about others, a strong tendency on the part of managers to call in consultants whenever there's a problem; for those consultants then to collect large amounts of data (in an attempt to quantify the unquantifiable), and trawl for ideas among the junior staff of the business concerned; to combine a few of them with whatever seemed to work at their last assignment; and then convert all that into a large book of Powerpoint slides (replete with arrows and quadrant diagrams) which management then faithfully implements.

Whether Australian managers are worse than any others in this respect, I couldn't really say.

I suspect that Australian managers are, in general, less successful than managers in many other countries in originating and commercializing new ideas.
Posted by Saul Eslake, Monday, 5 December 2005 1:26:36 PM
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Saul, Thank you for your comments, I appreciate you taking the time, as one of Australia's most respected economists, I thought you views would be enlightening for all of us, and as it turned out, perhaps for a change, I was correct. Thank you for your opinion, I wish it were possible for situations as I described not to occur, as I feel the employee's working life could be enhanced greatly, by working for competent managers, who were up to date with current trends, Regards,Shaun
Posted by SHONGA, Tuesday, 6 December 2005 12:40:56 PM
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