Australia's labour productivity drops to post‑pandemic low

The Productivity Commission’s latest quarterly bulletin shows Australia’s labour productivity fell 0.6 % in the March quarter while total hours worked rose 0.9 %. Over the year to March, productivity increased only 0.3 % compared with a 2.2 % rise in hours worked. Deputy chair Alex Robson described the trend as “going from bad to worse”, noting that output growth is not keeping pace with longer working hours.

The decline is most pronounced in the market sector, where productivity slipped 0.7 % quarter‑on‑quarter and grew just 0.4 % over twelve months. The utilities industry, especially electricity, was identified as the worst‑performing sector since 2000, demanding $10 of capital for every dollar of output versus the economy‑wide average of just over $2. The report links the slump to aging coal assets, reliability challenges and the transition to cleaner energy.

Treasurer Jim Chalmers, who has made productivity a priority for the Albanese government, points to a $10.2 billion regulatory‑relief package introduced in the May budget. The commission urges a disciplined policy focus to channel investment into low‑cost, efficient energy systems and support the broader productivity agenda.