Every few months, Tasmanian workers are treated to a familiar sermon. It usually comes from a business lobby, an employer group, or a CEO who has never staffed a ward, taught a classroom, or processed a planning application. The message is always the same: we’d love to pay you more, but you need to earn it first. Become “more productive.”
It sounds scientific. It sounds responsible. It sounds like the speaker has access to a secret dashboard of national efficiency metrics. But scratch the surface and the whole thing collapses into a tangle of accounting conventions, outdated mental models, and a fundamental misunderstanding of how a modern service economy works.
Let’s start with what productivity actually is. In national accounting, labour productivity isn’t a moral virtue. It’s a simple ratio: real output divided by hours worked. That’s it. Just arithmetic.
This made perfect sense in the 1950s when economies were dominated by manufacturing. Ten workers made a hundred widgets; next year they made a hundred and ten. Productivity rose. Wages rose. Everyone nodded along.
But Tasmania today is not a factory floor. Around two-thirds of our economy is services. And in services, the “output” part of the productivity equation becomes slippery, subjective, and in many cases entirely constructed by statisticians rather than observed in the real world.
Take health, education, policing, aged care, childcare, public administration – the backbone of modern life. These sectors don’t produce widgets. They produce wellbeing, safety, learning, care, functioning institutions. You can’t count those on a pallet.
And because there’s no market price for most of these services, the national accounts do something very simple: they define output as the cost of producing it. And what is the cost? Wages. Salaries. The labour itself.
In other words, in large parts of the economy, output is measured by what we spend, and what we spend is overwhelmingly wages. So if wages rise, measured output rises. If hours stay the same, measured productivity rises.
This is not satire or an episode of Utopia. This is how the ABS, the OECD, and every advanced economy compiles its national accounts.
Which brings us to the productivity lecture. When employer groups tell nurses, teachers, council workers, childcare educators, and public servants that they “can’t” have a pay rise until productivity improves, they’re ignoring an awkward fact: in these sectors, productivity is defined by wages, not the other way around. The lecture is built on a category error – applying a manufacturing-era mental model to a service-dominated economy.
Perhaps, more to the point, consider the people who most loudly deliver the productivity sermon: senior executives, consultants, lobbyists, industry representatives. What do they produce? How is their output measured?
There’s no widget count. No observable production metric. Their contribution to GDP is measured by their salary. If their salary doubles tomorrow, measured output rises. If hours stay the same, measured labour productivity rises. By definition.
So, if paying them more increases their measured productivity, why doesn’t the same logic apply to the rest of the service economy? This is where the sermon starts to look less like economics and more like ideology dressed up as arithmetic.
The truth is that productivity in services is notoriously hard to measure. How do you measure the “output” of a nurse who prevents a fall that never happens? A teacher who changes a child’s trajectory? A planner who approves a development in half the usual time?
You can’t. So, we use wages as a proxy. And then we forget we did that. And then we lecture the very people whose output we can’t measure about their supposed lack of productivity.
Meanwhile, sectors where productivity genuinely can be measured – mining, manufacturing, agriculture – have seen enormous gains over thirty years. Those gains have not flowed through to wages. Not because workers aren’t productive, but because the link between productivity and pay has been severed by bargaining power, market concentration, and policy choices.
Yet somehow the blame always lands on workers in sectors where productivity is least measurable and most misunderstood.
This brings us to debates about four-day weeks in local government. Critics insist that reducing hours without reducing pay is a “twenty percent pay rise with no productivity gain.” But that assumes productivity in council services can be measured like widgets. It can’t.
We keep hearing that Tasmania’s productivity problem is caused by council workers not working hard enough. Meanwhile, our rating system quietly punishes anyone who actually uses land productively and rewards those who sit on it. If we want more housing, more investment and more activity, perhaps the problem isn’t the people doing the work – it’s the system taxing the work.
None of this means efficiency is irrelevant. Councils should be transparent about service levels and turnaround times. We should measure what we can actually measure: customer satisfaction, processing times, service quality, employee wellbeing, innovation.
But lecturing service workers about productivity while ignoring structural barriers to economic activity is a convenient distraction from harder questions about tax settings, planning systems, and policy choices that actually shape economic performance.
If we’re serious about productivity, let’s be honest about what it is, how it’s measured, and where real constraints lie. Let’s stop pretending we can manage a twenty-first century service economy with 1950s factory floor metrics.
And if anyone wants to lecture workers about productivity, they should at least understand the national accounts well enough to know that their own measured productivity rises when they get a pay rise.
Tasmania deserves better economic analysis than recycled mantras from the manufacturing era. We deserve a debate grounded in how modern economies actually work. We deserve scrutiny of the structural barriers that genuinely constrain economic activity, not convenient scapegoating of the people delivering essential services.
If we can’t measure it properly, let’s stop lecturing people about it. Otherwise, the only thing being produced in abundance is hot air – while our hardworking service deliverers cop misinformed and misguided criticism.