Productivity Commission: Embrace technology, boost growth

New Zealand’s Productivity Commission plays down the threat to jobs from technology.

Instead, it says we need more technology to power higher productivity growth. It says this, in turn, will lead to higher income growth and will earn the money need to pay for the things we value.

The Productivity Commission’s draft report New Zealand, technology and productivity says the available data indicates widespread jobs market disruption won’t happen any time soon.

Productivity outlook uncertain

The commission points out the future of work is not certain. It says: “There will undoubtedly be change over the next 10 to 15 years, but not at unprecedented levels”.

In other words, that’s the foreseeable future.

The Productivity Commission’s press release hints at one of the great mysteries of modern times: We’ve been using computers in business for more than 50 years. Yet the dial doesn’t seem to move much on productivity. It certainly hasn’t moved as much as the marketing and hype from technology companies suggests.

In the inquiry director Judy Kavanagh’s writes: “If the rate of technological change was accelerating, you’d expect to see evidence in the official statistics, such as faster productivity growth, more business start-ups and more jobs being created and destroyed.

“But what we see in New Zealand and across the developed world is the opposite.”

Positive effects

The commission is right when it says technology mainly has a positive effect on jobs and work.

Think of, say, dishwashers. These machines let people spend less time with their hands in a sink full of plates and greasy water.

Someone has to make, distribute and sell then install dishwashers. They generally require regular servicing. These jobs are all better quality, better-paid jobs than minimum wage dishwashing.

And, let’s face it, a lot of that dishwashing was unpaid domestic work.

There’s also an industry supplying dishwasher detergent and rinsing agents.

Instead of spending time dishwashing, people can cook more elaborate meals. They can spend their time on other more productive tasks. Instead of domestic drudgery, people could get jobs.

If you look only at dishwashing, the sum of created jobs might be negative. Yet by displacing a menial task, other more productive opportunities open up.

This, in a nutshell, is why technology can displace jobs, but it can also often create as many or even more than it destroys.

We do a poor job

Back at the Productivity Commission Kavanagh says: “Technological change may pick up in the future but even so, it will take time to diffuse and affect work in New Zealand. We do a poor job of picking up technology quickly.”

You don’t need to look far to understand the truth of this statement.

Anyone who has been following the fuss about people adapting to watching the 2019 Rugby World Cup on streaming digital services instead of satellite TV can see this is on the money.

About half the population is ready to stream, close to half the population is pulling their hair out in frustration coming to terms with what is, in reality, a very simple switch from one medium to another.

Education is critical here. So is experience.

Rugby World Cup, productivity

Anyone who has spent the last decade or two using questionable services to download music and videos and then moved on to Netflix would find streaming Rugby World Cup games to be trivial.

Yet for people who have never seen BitTorrent, Chromecast or Apple TV, it can be a challenge.

There’s a clear link between the challenges Spark faces with domestic entertainment technology adoption and people at the sharp end of our economic extracting value from business technology.

Watching how this plays out with the Rugby World Cup could give us some clues about how to better leverage computers, broadband and other tools that can improve productivity.