Wednesday, 19 February 2014

Australian manufacturing and productivity

So it's been a while (OK, a couple of years!) since I posted here.

So here goes.  I was surfing the web, as you do, jumping from work mode to "hey - a putt-putt course", when I landed on an Aaron Swartz post - Fix the machine, not the person, which led me to this Wikipedia page, where this jumped out at me;

Team production

On a related note, Drago and Garvey (1997) use Australian survey data to show that when agents are placed on individual pay-for-performance schemes, they are less likely to help their coworkers. This negative effect is particularly important in those jobs that involve strong elements of "team production" (Alchian and Demsetz 1972), where output reflects the contribution of many individuals, and individual contributions cannot be easily identified, and compensation is therefore based largely on the output of the team. In other words, pay-for-performance increases the incentives to free-ride, as there are large positive externalities to the efforts of an individual team member, and low returns to the individual (Holmstrom 1982, McLaughlin 1994).
Bold is my emphasis.

Hmmm, I thought, could this be part of the reason why we currently have here in Australia, what the pollies and "business" are so fond of calling, "poor productivity", when we could be a dynamic economy again, if only "the workers" were "more productive"?

"More productive", for most workers, is employer speak for individual work contracts, unions busted, reduced conditions, reduced entitlements (the age of which we're apparently over now), and lower real wages than your parents enjoyed.

These titans of industry also wail that manufacturing (inherently a team production sphere), just isn't viable in Australia anymore, because of the high dollar, high electricity costs, the Carbon tax, the mining tax, high wages, lack of skilled workers, their poor productivity, blah blah blah, wah wah wah.

Well, you pay peanuts, you get monkeys.  (No disrespect intended to our fellow Simians, who've already mastered learning by tablet.)

And funnily enough, by visiting the blog today, and catching up on a few of my favs, it got me to this Peter Martin post about an excellent presentation by journo Tracey Spicer, who stripped down to her underwear to make a point, at a recent TedXSouthBankWomen confab in Brisbane.

Play the video, and wait for the punch line. It relates.