Australia s performance in a global market Benchmarks in productivity and competitiveness Julie Toth Chief Economist
Global comparisons: data sources and examples OECD database and reports IMF economic outlooks World Bank data and reports ILO wages & conditions data US Bureau of Labor Conference Board Total Economy Database (the other TED ) WEF Global Competitiveness Index and other data series The Economist Intelligence Unit (EIU) Angus Maddison s world economy historical database Global consultants reports (e.g. DB, McKinsey, Boston, PwC) Global personnel agency reports on labour costs & living costs
AUD is a key challenge. But raw cost is not the whole story AUD/USD and non-rural commodity price index (in USD) Source: RBA Exchange Rates database (monthly); RBA Commodity Price Index.
FX influence in global comparisons? e.g. labour costs Average hourly labour costs in manufacturing, US$, 2012 Source: Conference Board, International Labor Statistics database.
FX influence in global comparisons? e.g. minimum wages National minimum wage, purchasing power parity (PPP) basis Source: OECD, Stat database (data to March 2013).
Meaningful global comparisons? tax structures Taxes on goods and services Taxes on incomes and related (% of total taxation, 2011) (% of total taxation, 2011) Sources: OECD Economic Survey of Australia, Dec 2014; OECD Revenue Statistics database.
Meaningful global comparisons? Public sector debt Public sector debt, % of GDP, data to 2013) Sources: OECD Economic Survey of Australia, Dec 2014; OECD Outlook database.
Meaningful global comparisons? house price growth Index of real house prices, in national currency (1995=100) Source: OECD Economic Survey of Australia, Dec 2014. OECD, Housing Prices Database. 8
Meaningful global comparisons? productivity growth rates National multi-factor productivity (MFP) growth, annual averages Source: Productivity Commission calculations derived from the Conference Board Total Economy Database, PC 2014.
Productivity: a global statistical definition Productivity is measured as the volume of output created per unit of input: labour productivity is measured as output per unit of labour input (hours worked) capital productivity is measured as output per unit of capital input multi-factor productivity (MFP) is measured as output per unit of combined inputs of capital and labour. MFP is the preferred measure of comparative productivity analysis. Productivity: why does it matter so much? Productivity isn t everything, but in the long run it is almost everything. A country s ability to improve its standard of living over time depends almost entirely upon its ability to raise its output per worker Sources: ABS; Paul Krugman 1997, The Age of Diminished Expectations, MIT. (Professor Paul Krugman, 1997)
WEF s Global Competitiveness Index series Commenced in 2005 Number of countries changes each year: 125 countries in 2005, rising to a peak of 148 countries in 2013-14 144 countries in 2014-15 Range of data sources expands each year. In 2014-15 they included: annual executive opinion survey conducted by Partner Institutes in each country OECD and World Bank databases National Government and data agencies (e.g. the ABS in Australia) Regular topical comparison reports built from the same database: Enabling trade - Human capital - Travel and tourism industries IT applications - Global gender gap - Regional reports WEF Global Risks Report is constructed and published separately Source: WEF Global Competitiveness Report, 2014-15.
WEF s Global Competitiveness Index series Composite ranked index based on 12 pillars and over 100 individual indicators Source: WEF Global Competitiveness Report, 2014-15.
WEF s Global Competitiveness Index series Composite ranked index with country-specific weights, to suit levels of development and income ranges * Australia is classed as a stage 3 innovation-driven economy, due to our high level of GDP per capita. Source: WEF Global Competitiveness Report, 2014-15.
Who is doing well in WEF? What can they teach us? WEF Global Competitiveness Indicators: national rankings, 2014-15* Rank Country Rank Country Rank Country 1 Switzerland 11 Norway 21 Austria 2 Singapore 12 United Arab Emirates 22 Australia 3 United States 13 Denmark 23 France 4 Finland 14 Taiwan 24 Saudi Arabia 5 Germany 15 Canada 25 Ireland 6 Japan 16 Qatar 26 South Korea 7 Hong Kong 17 New Zealand 27 Israel 8 Netherlands 18 Belgium 28 China 9 United Kingdom 19 Luxembourg 29 Estonia 10 Sweden 20 Malaysia 30 Iceland Source: WEF Global Competitiveness Report, 2014-15. 14
Australia in WEF: confirms that Australia has become an expensive, less competitive country in which to do business WEF Global Competitiveness Indicators: Australia s rankings, 2007 to 2015* Year Overall competitiveness Source: WEF Global Competitiveness Report, 2014-15. Flexibility of wages Burden of Gov. regs Technological readiness Business Innovation 2007-08 19 87 68 17 22 2008-09 18 90 66 19 20 2009-10 15 75 85 20 20 2010-11 16 110 60 23 21 2011-12 20 116 75 22 22 2012-13 20 123 96 19 23 2013-14 21 135 128 12 22 2014-15 22 132 124 19 25
Why? Top 5 impediments to doing business in Australia* % of respondents who identify each factor as one of their top 5 problems * Respondents were asked to select the five most problematic factors for doing business in their country, from a list of 15 possible factors. Source: WEF Global Competitiveness Report, 2008-09 to 2014-15. 16
Why? Relatively poor labour flexibility Labour market efficiency measures, Australia s global ranking Source: WEF Global Competitiveness Report, 2008-09 to 2014-15.
Why? relatively higher regulatory burden Government related performance measures, Australia s global ranking Source: WEF Global Competitiveness Report, 2008-09 to 2014-15.
Positives? Australia s strengths in the WEF rankings Australian competitiveness indicators in the top 10 global ranking, 2014-15: 1st 1st 1st 3rd 4th 5th 5th 6th 6th 8th 8th secondary education enrolment rates; Legal Rights Index; ability to manage inflation; soundness of banks; number of mobile broadband subscriptions per 100 people; number of days required to start a business and number of regulations that must be met to start a business; level of development in our financial markets; tertiary enrolment rates; efficacy of corporate boards; and intensity of local competition. Source: WEF Global Competitiveness Report, 2014-15.