Services sector needs productivity boost

Colin Brinsden, AAP Economics and Business Correspondent
·1-min read

The Productivity Commission believes new policies are needed to drive productivity in the services sector, and different from those that achieved previous stellar gains in agriculture, mining and manufacturing.

"Being a high productivity economy in the 21st century relies on having a high productivity service sector," the commission's chair Michael Brennan said releasing a new report on Australia's long-term productivity experience.

"This will require new policy approaches, and a new research agenda to support it."

He said history showed the importance of openness to trade and investment, competition and flexible regulation of product and labour markets.

The report emphasises the importance of policy in improving relative living standards and increasing productivity.

"Almost all of Australia's long-term increases in income are due to productivity growth. But the path has not always been smooth," Mr Brennan said.

The report warns that over the past two centuries, Australia has experienced several severe recessions.

"While economic growth has often rebounded quickly, the labour market has taken longer to recover," Mr Brennan said.

"Labour markets are often weak long after recessions end. In some cases, unemployment has remained high for over a decade."