New Zealand's measured sector labour productivity rose 0.8 percent in the year ended March 2025. The gain followed a revised flat reading in 2024 and came amid declines in multifactor and capital productivity.
Stats NZ data show the labour productivity index reached 1391 in the year ended March 2025. It stood at 1380 in 2024 and 1381 in 2023. The index has risen 39.1 percent since 1996.
University of Otago Vice-Chancellor Grant Robertson and Associate Professor Dennis Wesselbaum discussed the figures in a recent podcast. They framed productivity as the key transmission mechanism from inputs to outputs.
Wesselbaum put it this way: "You compare the stuff that we produce – goods and services – and you relate that to the inputs that we're putting in: labour, capital, knowledge, effort. And so that transmission is essentially productivity."
Wesselbaum called productivity the topic that matters despite limited electoral appeal, telling Newsroom: "It's probably not a very sexy topic but it is … the topic that matters."
The 0.8 percent labour productivity gain contrasted with a 0.9 percent fall in multifactor productivity and a 3.0 percent drop in capital productivity. Primary industries recorded the strongest long-term gains, with the index at 1722.
A longer-run slowdown
Treasury analysis shows whole-economy productivity growth averaged 1.4 percent a year from 1993 to 2013. Growth slowed to 0.2 percent a year over the following decade. The agency maintains a 1 percent long-run assumption in forecasts.
New Zealand ranks 20th of 29 countries on productivity in the New Zealand Initiative's 2026 report. Output per worker remains 25 to 30 percent below the OECD average. The gap has persisted or widened since COVID-19.
It's probably not a very sexy topic but it is … the topic that matters.
ASB economists estimate closing the gap could add $60 billion in annual incomes by 2050. AI integration alone could add $20 billion a year by 2040.
Xero data show New Zealand small businesses at $74 per hour worked in early 2026. This trails Australia and the UK.
Labour productivity growth turned negative again at minus 1.76 percent year-on-year in June 2026. The prior quarter recorded positive 1.83 percent growth.
