On August 19, a significant gathering of advocates and experts will take place in Canberra for an economic roundtable, with “productivity” as the central theme. Treasurer Jim Chalmers has emphasized that this will be the event’s “primary focus.” But what does productivity truly entail? At its core, productivity measures the effectiveness of productive effort, essentially how well inputs are converted into outputs. Enhanced productivity means achieving more with less, a crucial factor in improving living standards over time.
However, the path to increasing productivity is fraught with debate. As the discussions leading up to the roundtable illustrate, there is no consensus on the best strategies to pursue. Business leaders advocate for reduced regulation and lower taxes, while unions push for a tax system overhaul to redirect investments from housing to more productive outlets. University leaders call for greater emphasis on education, and tech entrepreneurs like Scott Farquhar of Atlassian highlight the potential of artificial intelligence. Despite Chalmers’ call for innovative ideas, the suggestions largely echo familiar themes.
Historical Perspectives on Productivity
In exploring productivity, a historical perspective can provide valuable insights. The concept of productivity has been a topic of government-led debates for over a century. As detailed in Sean Scalmer’s forthcoming book, “A Fair Day’s Work: The Quest to Win Back Time,” productivity was a major concern even during the early 20th century. During World War I, the focus on productivity extended beyond the battlefield to the home front, where nations realized that victory depended not only on military might but also on the capacity to produce armaments efficiently.
Research from the United States, United Kingdom, and continental Europe found that longer working hours actually reduced productivity, while shorter hours improved employee satisfaction, health, and cooperation between workers and management. These findings influenced post-war labor movements, with Australia leading the charge in reducing the working week from 48 to 44 and eventually 40 hours.
The 1920 Arbitration Case
A landmark case in 1920 saw Justice H.B. Higgins of the Commonwealth Court of Arbitration deciding in favor of timber workers’ demands to reduce their working hours to 44 per week. Higgins drew on international studies linking productivity to working hours and argued that changes in work and technology imposed new burdens on employees. He questioned whether employees should not receive some advantage from labor-saving devices, emphasizing the need for compensatory rewards.
Contemporary Relevance and Challenges
Higgins’s principles, though over a century old, remain relevant today. In an era where artificial intelligence promises significant productivity gains but also poses threats, employee interests and reduced working hours should be central to discussions. Since the late 1990s, productivity growth has slowed, partly because employees are working longer hours, often unpaid. Research from the Australia Institute indicates that in 2024, full-time employees in Australia worked an average of 4.1 hours of unpaid overtime weekly.
Australian women — who shoulder a disproportionate share of domestic responsibilities — face heightened risks of exhaustion.
Extended workdays have long been linked to declining productivity. Could reducing hours once again offer a solution? International trials of a four-day workweek show promising results, yet the Australian government has not pursued such experiments. The 2023 Senate Inquiry into Work and Care recommended a trial, supported by ACTU President Michele O’Neil, but the government’s response was tepid, merely “noting” the suggestion without further action.
Looking Ahead: Opportunities for Reform
Focusing on working time could enhance productivity, aligning with Australia’s social democratic traditions. As the nation grapples with its productivity challenges, historical lessons and contemporary trials offer pathways to reform. The upcoming roundtable in Canberra presents an opportunity for stakeholders to revisit these ideas and consider bold, innovative approaches to productivity that balance economic growth with social well-being.
Sean Scalmer, an associate professor at The University of Melbourne’s School of Historical and Philosophical Studies, originally published this analysis on The Conversation.
