Productivity has been a prickly issue for Australia for more than a century

Australia Broadcast Center

3 days ago

On August 19, a group of advocates and experts will converge on Canberra for an economic roundtable. "Productivity," announced Treasurer Jim Chalmers, is to be the event's "primary focus".
What does this mean? The term "productivity" can intimidate the outsider, but its basic meaning is simple: the effectiveness of productive effort — the extent to which inputs lead to outputs. Greater productivity means we produce more with less. Rising productivity has been crucial to expanding living standards over time.
How we might increase productivity is more contentious. As the lobbying before the roundtable demonstrates, there is no firm agreement on the best measures to adopt.
Business leaders have suggested reduced regulation and lower tax. Unions have promoted a renovation of the tax system, that might direct investment away from housing and towards other outlets, more likely to enhance efficiency. University vice-chancellors have suggested greater education; Scott Farquhar of software company Atlassian has promoted the potential of artificial intelligence. Though Chalmers has solicited fresh ideas, none suggest new or striking departures.
In this context, an historical perspective might offer some insights. Reaching back into the early 20th century, 100 years ago, shows us that government-led debates on "productivity" are not new. It also discloses policy proposals that might raise new questions and new possibilities for government and society.
As detailed in my forthcoming book, A Fair Day's Work: The Quest to Win Back Time, "productivity" was also on the minds of the world's statesmen a century ago.
As the first world war was fought with terrible intensity, the battle for martial supremacy went from battlefront to home front. Antagonists quickly recognised that victory rested not just on the size of armies, but also on the capacity to produce armaments. In an effort to gain predominance, rivals expanded factories and pushed workers into longer shifts. They commissioned experts in engineering, medicine and the developing social sciences to monitor results and propose reforms.
Those studies, undertaken by researchers in the United States, United Kingdom and continental Europe, also made their way to Australia. Longer hours, it was found, reduced productivity. Reduced hours lessened absenteeism and accidents. A shorter working day promoted employee satisfaction and health. It reduced both overt industrial conflict and covert resistance to employer requests. It encouraged cooperation between employees and management. It heightened productivity.
In the war's aftermath, workers drew on this research to justify their quest for a shorter working day. Australia was in the vanguard. Just as Australian employees were among the first to win an eight-hour day, from the mid-19th century (which was initially a 48-hour week, worked over six days), they were also at the front of the pack in the achievement of a 44- and a 40-hour week.
The reduction of the working week was widely considered a means of heightening productivity. It was also regarded as a means of securing social justice. These dual principles were most famously expressed in a notable case brought before the Commonwealth Court of Arbitration in 1920. Justice H.B. Higgins was required to decide on the claims of timber workers to reduce their standard working hours to 44 per week. In granting their claim, Higgins explained his reasoning. Not only did he draw on international studies that emphasised the link between productivity and hours, he also enunciated a more general principle or idea.
Changes to work, and the introduction of new technologies, imposed new burdens on employees, Higgins emphasised. For timber workers, they made work less autonomous and less creative, more repetitive and more fatiguing. Yet despite these difficulties, he noted, employees had not resisted the imposition of new technology. As a consequence, employers had enjoyed greater output and often higher profits.
Higgins suggested that the one-sidedness of this exchange created the pressure for some compensatory reward for employees, asking "are they to get no direct advantage from the introduction of labour-saving devices?"
Though Higgins's judgement was delivered more than 100 years ago, the principles remain worthy of consideration. In a world where artificial intelligence promises enormous advances in productivity, though also great threats, the interests of employees — and the recompense of reduced time at work — should be central to any collective conversation. This would enhance social acceptance of change.
Since the late 1990s, increases in productivity have flagged. But can this be surprising, as employees have increasingly been asked to work longer hours, often unpaid. Research from the Australia Institute suggests that in 2024, full-time employees in Australia worked on average 4.1 hours of unpaid overtime every week. They are also enduring longer commutes, and are drained by the burden of caring for children and increasingly for elderly parents.
Australian women — who carry an outsized share of the domestic burden — are especially at the risk of exhaustion.
Extended working days have long been associated with declining productivity. Might not reduced hours again offer some corrective? As a succession of international trials demonstrate the practical possibilities of a four-day week, it is somewhat dispiriting that a Labor government has not yet sought to test the matter with its own experiments.
The 2023 Senate Inquiry into Work and Care proposed that the Australian government trial a four-day week. ACTU President Michele O'Neil publicly supported the plan. But the government's formal response merely "noted" this recommendation. It has initiated no further action.
Attention to working time might help to deliver heightened productivity. It is certainly in harmony with the reforming traditions of Australian social democracy.
Sean Scalmer is an associate professor at The University of Melbourne's School of Historical and Philosophical Studies. This piece first appeared on The Conversation.