Strange bedfellows you might say – it’s not often that BusinessNZ gets to share a stage with the CTU and the Government on an issue where all parties are in agreement. But it happened recently, at the launch of a project to promote productivity growth.

BusinessNZ has had a long-term interest in productivity. It’s an area of interest to the CTU also, and they were happy to join talks on ways in which we could work together to make higher productivity a reality. Then the Government became involved, and now we have a working party that’s focused on building a higher value, higher skill and therefore higher wage economy.

This is excellent news: getting consensus around productivity growth is one of the great opportunities of our time.

BusinessNZ committed a large chunk of our capability to the first report on the issue released late last year. We see productivity as a key to future prosperity. Productivity growth is an imperative. We “gotta” do this – we don’t really have a choice. Our competitors are all building their productivity. If we don’t run the race and if we don’t win, all Kiwis will be worse off.

There’s no silver bullet solution to getting sustained economic growth, but productivity comes close. It’s simply a measure of the amount of goods and services derived from a given amount of labour, capital, resources, knowledge and time.

The notion of increased productivity assumes a competitive environment – the impetus to produce more from less comes from the drive to outdo competitors, and new techniques to enable increased productivity are very often learned from competitors. But competition is not risk-free and it requires change – and that can be challenging.

One of the sad things about productivity is that the word itself has been the subject of such hype and political colouration that people might get scared about it. ‘Productivity’, like ‘flexibility’, can be a code word signalling organisational change. The person who’s been through a few company restructurings can get understandably nervous – ‘productivity’ might be the word that signifies your job’s on the line.

So we should not take lightly the CTU’s and the Government’s involvement in this initiative. They are taking a risk, since initiatives to increase productivity sometimes entails uncomfortable change for employees, and we commend their involvement.

The challenge to the CTU and the Government is to stand firm against some of their own who might prefer the sluggish safety of protectionism to the dynamic rewards of competition.

Those rewards will certainly outweigh those of a protected, less productive economy. For example, investing in new technology might require upskilling for some employees or the displacement of others, but higher productivity makes retraining more affordable, and at this stage in the economic cycle, potential job losses are more likely to occur in the context of an employment market where it’s easier to get a new job.

For business, the challenge is to not make the mistake of thinking productivity is just a business case – numbers on paper – when the reality is that people’s lives are involved. Employers need to ensure that change is dealt with sensitively and appropriately. In a tight labour market, the rewards are obvious. A reskilled or redeployed employee, positive about the change experience, will often be the best outcome for all parties.

The notion of productivity growth is not new to employers. It might be comfortable for some businesses to think of this recent productivity initiative as more of the same, or as telling them how to suck eggs. I respectfully disagree. Among other benefits, the initial report outlined several drivers of productivity* that businesses can use to audit their current operations with a view to understanding gaps and opportunities for the future.

There’s also a special challenge to the Government: to restrain its role to one of support, not direction. That’s because productivity is not a one-size-fits-all solution. Individual enterprises and groups of workers need to be free to come up with their own ways of working through productivity issues and their own successful solutions, and need a supportive environment in which to do this, rather than prescription.

This will challenge some of the Government’s less helpful tendencies, evidenced by the fact that it has declined to discuss infrastructure, resource management and labour laws within the debate thus far. Yet productivity can be closely intertwined with employment relations, holidays law, infrastructure and so on – hopefully the Government will see fit to embrace a more appropriate view of its role in increasing productivity at some stage in the future.

As for other political parties, BusinessNZ would like the electorate to get a clear idea of where all parties stand regarding productivity growth. During this year’s election campaign BusinessNZ will analyse all parties’ policies asking the question, ‘Will this policy help or hinder productivity growth?’ We will be arguing for government policies that make way for improved productivity throughout the 2005 election campaign and beyond.

*Information on the workplace productivity project is on www.dol.govt.nz.

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