GDP figures out today show that there was a strong increase, at 0.9 percent, in what New Zealand produced in the three months to December 2015. Normally that should mean higher incomes for New Zealanders.
But CTU Economist, Bill Rosenberg says that the picture underlying that is not as rosy.
“Firstly, this increase is partly driven by more people moving to New Zealand. Per person, production only increased 0.3 percent over the three months – and what benefited people living in New Zealand rather than people overseas actually fell 0.1 percent”, Rosenberg said.
“Behind this are poor productivity increases. What was produced for each hour people worked also fell 0.1 percent over the three months. It rose only 0.2 percent compared with the same period a year ago.
“Productivity forms the basis for a better standard of living – if it flows through into wages. We need strongly rising rather than falling productivity to really improve future incomes. Government, employers and working people all have critical roles to play in boosting productivity.
“Secondly, business investment was not high enough. It fell 2.6 percent over the three months and 1.4 percent over the same period last year. The Government needs to do more to support productive investment in businesses rather than speculation in real estate.
“Finance and real estate are among the highest growth areas of the economy. Yet agriculture and manufacturing both produced less over the three months to December, and over the year their production increased more slowly than the rest of the economy. There is strong growth in tourism, but many of its jobs are insecure and low paid.
“As a nation we are producing more and getting less for it. There are also growing concerns about the international economy. The Government has a critical role to play in turning this around and to ensure that working people are getting their fair share,” Rosenberg said.