From the AIG:
“Australia’s competitiveness ranking has slipped further in the Global Competitiveness Report 2014-15 produced by the World Economic Forum (WEF), dropping one place from last year and continuing an annual downward trend since 2009-10 when we ranked 15th,” Australian Industry Group Chief Executive Innes Willox said today
The Australian Industry Group is the WEF’s official research partner in Australia.
“With Australia’s absolute Global Competitiveness Index (GCI) performance static this year, and broadly stable since 2010-11, more and more of our competitors are leap-frogging ahead as they improve their performance and competitiveness.
“Australia’s deteriorating international competitiveness is particularly evident in the burden of government regulation, where our ranking has fallen to 124th in 2014-15, from 60th in 2010-11.
“Australia’s poor performance is highlighted this year by two ‘key pillars’ of the GCI:
- Goods market efficiency, where Australia’s peak ranking of 9th place in 2009-10 has plummeted to 29th place this year; and
- A disturbing 56th place in labour market efficiency, from a high of 9th place in 2009-10. Specifically in relation to labour market efficiency, Australia has slipped to:
- 125th for relative competitiveness of pay and productivity, from a peak of 26th in 2008-09;
- 136th for rigidity in hiring & firing practices, compared to 46th in 2008-09;
- 132nd for the flexibility of wage determination, down from 75th in 2008-09;
- 109th for the co-operation in labour-employer relations, compared to 37th in 2008-09; and
- 50th for the competitiveness of redundancy costs, from a high of 6th in 2011-12.
“The WEF Report also highlights the need for government and industry to foster a greater culture of business investment and innovation, given our relatively low rankings for ‘technological readiness’ (19th), ‘business sophistication’ (28th) and ‘innovation’ (25th). These are issues we have raised on behalf of members in our submissions to the Financial System Inquiry and Competition review this year, and will again in the upcoming taxation whitepaper.
“The WEF Report reinforces recent calls from the business community for greater urgency to be injected into building domestic productivity and competitiveness. This is particularly the case in relation to reforms of industrial relations with restrictive labour regulations identified as the most significant impediment to doing business in Australia. In light of this report, Ai Group again urges the Government to accelerate progress on its foreshadowed Productivity Commission review of Australia’s workplace relations arrangements.
“Among this overall picture there are nevertheless some important bright lights evident from this year’s Report, with Australia continuing to be a world leader in a number of key areas,” Mr Willox said. For example, Australia ranks:
- 1st for secondary education enrolment rates (and 6th for tertiary enrolment rates);
- 1st for the legal rights index;
- 1st for our ability to manage inflation;
- 3rd for the soundness of our banks;
- 4th for the number of mobile broadband subscriptions per 100 people; and
- 5th for the number of days to start a business.
“These positives suggest we have the fundamentals in place to support a real improvement in national economic competitiveness, but this will require a concerted effort to address serious shortfalls in the key areas of labour flexibilities, business regulation and company taxation,” Mr Willox said. “Standing still is not an option – it is clear that improvement is necessary just to keep up.”
You have to have a giggle at some of those so-called “strengths”. The dominance of the government sponsored (as opposed to sound) banking system is probably the single greatest weight on competitiveness outside of the exchange rate in the economy.
Industrial relations could be freed up some. But much more important are the exchange rate and capital allocation into productive enterprise. The full list is here.
