Productivity is complex and much harder to fix than experts say

Even though everyone talks about productivity as if it’s all a matter of political will for the government to “fix” it, doing so is very complicated (especially when everyone is using it as a cover to push their own interests).

Here’s an example: Productivity Commission, annual productivity newsletter last week – and this was even more bad news. Labor productivity fell 0.2% and multifactor productivity fell 0.5% in the 12 months to June 2025.

If labor productivity is often counterintuitive (for example, if increasing labor productivity can reduce demand for workers while full employment means lower productivity because less-skilled workers are in the workforce who would otherwise be unemployable), multifactor productivity can get you into trouble.