Explainer · Productivity
Productivity is not a sermon about hard work
It is output per hour, not hours worked. The level can look fine while the growth has stalled.
What the word actually means
Labour productivity is how much real output an hour of work produces. Multifactor productivity asks the same question after you also account for the capital sitting under that hour: machines, software, buildings.
It is a ratio. The top is output. The bottom is inputs. If the bottom grows as fast as the top, productivity is flat even if everyone is exhausted.
What it is not
It is not "working harder." A longer shift raises output and hours together. The ratio can sit still. It is not a moral score. A miner with a bigger truck can be more productive than a nurse on a twelve-hour roster.
It is also not wages. Pay can lag output for years. When that happens the gap is a distribution story, not a productivity story, and the two get glued together in press releases.
Why it keeps turning up in Australian arguments
Treasury and the Reserve Bank use productivity growth as the speed limit on real wages that does not raise prices. If that speed limit has been crawling, a pay rise that looks modest on a poster can still be described as "unaffordable."
The honest move is to publish the level and the growth. Australia can sit high on the first and weak on the second. That is a two-truths gap, not a contradiction.