A productivity idea

February 14th, 2013 at 11:59 am by David Farrar

My street, Hobson Street, has had crews working on it for the last few weeks. This is a good thing, as they are laying duct for fibre.

Generally this means that part of the road is one way for a couple of hundred metres. This means that two people are employed to hold up a go and stop sign to allow traffic to flow.

Everyday as I see this, it occurs to me there must be more efficient ways to do this, than have two people doing nothing but holding up a go and stop sign. Three ideas:

  • Have a set of connected electronic stop and go signs which one person can control with a remote. That halves the operational cost, for what I presume is a modest capital cost.
  • Have a set of connected electronic stop and go signs and just have them on a timer where they flip say every 45 seconds (with a 15 second break where both are red to allow traffic to clear inbetween). This means you need no people operating then. Would not work in all situations but definitely would for such a small road.
  • Just make Hobson Street one way temporarily. No electronic signs or people needed. Not a major hassle as all you have to do is travel down Murphy Street 300 metres and then come up Hobson.

Any other ideas for productivity gains? Any flaws in my ideas?

Now job growth is a bad thing

April 19th, 2012 at 3:00 pm by David Farrar

I thing politics has got to a farcical level when the Opposition complain about jobs moving from Australia to New Zealand. The SMH reports:

HUNDREDS of Australian jobs have been shifted to New Zealand as local producers try to avoid the impact of high wages, a soaring Australian dollar and restrictive labour laws.

Woolworths is the latest to transfer jobs across the Tasman. It transferred 40 contact centre jobs to Auckland this week. Imperial Tobacco has also announced it will move cigarette manufacturing from Sydney to New Zealand.

The companies are following in the footsteps of the food production industry, which has been shifting jobs out of Australia to take advantage of New Zealand’s lower wages.

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Heinz Australia recently scrapped more than 300 jobs across three states in favour of its large plant in Hastings, New Zealand’s largest food processing and food producing centre.

The International Labour Organisation says Australian manufacturing workers earned more than $US35 an hour in 2008. In New Zealand the rate is under $US20 an hour.

Average weekly earnings for manufacturing workers in Australia are higher than those in Canada, Britain, New Zealand and the United States, says a study which put Australian earnings at more than $1000 a week, versus about $700 in NZ.

Now Labour for four years has gone on about jobs. It has said that the number one priority must be more jobs. If you try to discuss welfare reform, they say “what about the jobs”. No matter what the issue, they say “what about the jobs”.

So what do they say to jobs moving from Australia to New Zealand:

“Labour does not want New Zealand to become Australia’s Mexico, yet with lower value jobs such as making cigarettes that is exactly what is happening.

“Bill English has been misdirecting his energy on praising the advantages of low wages to attract Australian jobs rather than coming up with real ideas to grow the economy.

“There are record numbers of Kiwis leaving for Australia. They are not going so they can work in call centres or cigarette-making factories,” David Parker said.

This is just bullshit elitism, that must be unique to the Wellington beltway. Go out to a provincial town with high unemployment and tell them that a job in a call centre is not worth having, and they should remain on welfare.

Anyone who buys into this sort of bullshit is seriously out of touch with reality, and reflects more their elitist views.

They are also economically ignorant also. If you argue against Australian companies creating jobs in New Zealand because our wages are lower, you don’t understand the basics of supply and demand. Remember it is the market which broadly sets wages – not Goverments.

Now if you have more jobs created in New Zealand, it increases the supply of jobs. What does increasing the supply do? It pushes wages up. Just as when the supply of jobs diminishes, then wages drop or at least do not increase in real terms.

Next time Labour complains about unemployment, remember how they think some jobs are not worth having. They’d rather people be on welfare than working in call centres.

As for closing the wage gap with Australia. There is only one sustainable way to do that – greater productivity including labour productivity. The very thing that Labour is fighting against at the Ports of Auckland, where the union is striking rather than accepting a 10% pay increase in return for greater labour productivity.

Some good news

March 20th, 2012 at 3:11 pm by David Farrar

Stuff reports:

Labour productivity improved 3.5 per cent in the year to March 2010, according to new Statistics New Zealand figures.

In part that reflected fewer workers in manufacturing, building and business services with those remaining producing more each.

The standout sectors were communications services, with productivity up 12.4 per cent in the year to March 2010, and finance and insurance up 7 per cent.

There was strong growth in productivity for the goods producing sector, up 3.8 per cent, and the service sector, up 3.3 per cent.

Labour productivity growth is important and 3.5% isn’t too bad. However the way it has come about is sub-optimal:

Labour productivity is the amount of goods and services produced by each worker. The declines in labour input were greater than that for output, resulting in labour productivity growth for these sectors.

Obviously the recession impacted. Ideally what we want is labour inputs increasing, but outputs increasing even faster.

Curran on productivity

October 9th, 2009 at 2:00 pm by David Farrar

A mixture of good and bad in Clare Curran’s blog on productivity:

We have a productivity taskforce set up by the National Government and led by the ignominious Don Brash. It’s likely to come up with an argument for economic growth which is about selling our state assets and keeping wages down, or cutting jobs to create more profits. Because that’s what the conservative side of politics believes productivity to be. Gordon Campbell’s piece on this a couple of months ago is worth reading.

Labour, on the other hand, is an enabler. We want economic growth. We don’t want it at the cost of creating greater gaps in our society between those on no income and those who do have one.

This is just puerile. National bad. Labour good.  She declares that the conservative side believe productivity is about cutting wages and jobs. Slogans are not substitute for analysis.  Fortunately we get this later on:

1. Open government. In particular open software.

The NZ Government currently spends around $2 billion a year on IT, in software, hardware and all the services that go with it.  We have lots of government websites, but we don’t have an open source policy and we don’t practice open government. We have attempted to harmonise govt IT and networking through the previous Labour Govt’s digital strategy. Much of that appears to have been ditched. There’s an awful lot more work to do in this area.

The US government, under Obama, has made a commitment to cut its total IT spend of $76 billion by between 50% and 80% by driving its systems into open source and cloud computing.

Could we save $1 billion?

I think there is considerable potential in this area, and delighted to see Labour take an interest in it.

2. Working from home. Telework

Ten year’s ago, a study funded by the Auckland Regional Council found that spending $3 million on an awareness raising programme about the benefits of telework targeting employers, could take 10% of Auckland’s traffic off the roads. There’s research overseas demonstrating that you can save up to 15% in workplace productivity and lower overheads through flexible arrangements with your employees working from home. And then there’s the greenhouse gas savings, and the boost to local communities. Let alone the social capital through having more parents at home, more often.

Yep – very much the way of the future. I will point out this is one of the reasons why National pledged $1.5 billion for fibre to the home in 2008, as compared to Labour’s $340 million.  I think the fibre rollout will see a very significant increase in people working at least some of the time from home, and some smaller firms doing away with offices all together. In fact some have already started.

3. Saving time. Improving our basic computer skills

Consider this. The UK National Health Service employs 1.2 million people. I’m told they recently put 100,000 staff through a programme to upgrade their basic computer skills, called the International Computer Driver’s Licence (ICDL). This is a reputable programme, developed through the European Union.

An analysis of its effectiveness showed they’d saved 38 mins/day for each employee. Or four weeks per person per year. Crikey! And that was because each staff member knew how to work better with the software they used every day at work and how to solve their own problems.

Not a bad idea also.  We agree on the details, if not on the rhetoric!

Key on productivity

March 18th, 2009 at 5:00 pm by David Farrar

John Key has given a speech to a CTU conference on productivity. Some extracts:

Getting the representatives of employers, workers, and Government around the table and constructively working together is something I want to encourage and continue.

Yes, there’s plenty we disagree on.   That will probably always be the case.

I fully expect unions to continue to oppose some Government policy and for business and employers to do the same.  Employers and employees will naturally come to loggerheads on occasion.  And, I reserve the right to criticise the approach and ideas of business, or unions, from time-to-time.

But the sum of our disagreements is no match for the weight of what we can achieve together.

I’m trying to imagine Michael Cullen delivering this speech to the Business Roundtable “rich pricks” 🙂

The question is: how do we go about lifting those wages?

One argument says that the Government should simply raise the level of the minimum wage.

And yes, that’s a small part of the answer.

That’s why, even in the midst of extremely challenging economic conditions, the National-led Government lifted the level of the minimum wage this year.

But, in reality, lifting the minimum wage rate will only take workers so far.

If we are to see New Zealanders paid better across the board, to assure them of enduring  employment opportunities, and if we’re to ensure workers can aspire to wages that keep pace with their increasing  efforts and abilities, then simply raising the minimum wage is not the answer.

In the end, it is productivity that drives wages.

So the answer is to ensure that businesses are more productive, and more profitable, and that employers are therefore able to pay their workers better and improving wages.

Productivity and profit are not bad. You need to grow the cake to share it.

New Zealand is a small open economy and this downturn has serious implications for us.

The effects can already be seen. Falling export volumes. Lower growth rates. Struggling businesses. Climbing unemployment.

Faced with these facts, and the dire predictions in the media, it’s tempting for all of us to throw up our hands in despair.

But it’s my sense that New Zealand is in fact in a much better position to weather the global economic storm than many other countries.

Yes, we are in for a rough period ahead.  I don’t doubt that.  To argue otherwise would be to ignore the obvious links between our fortunes and those of the wider world.

Basically the whole world is going to have reduced standards of living.

Let me finish by saying that in recent times the CTU has shown leadership in New Zealand’s fight for economic growth.

You’ve been prepared to work with the Government, and with employers, to find solutions.

I want to keep building on that relationship.

There is a lot to gain from each of us understanding each other better, from working out what we have in common, and deciding where we can deliver more together.

I absolutely share your vision for a more-productive, higher-wage, higher-skilled economy, producing goods and services valued throughout the world.

And I look forward to working with you to make that vision reality.

Such nice words after the CTU spent $100,000 attacking him in the election!