Andrew Birmingham, Transformation Agenda Special Report, Australian Financial Review, 19th April 2016
In 1987 Robert Solow, winner of the Nobel prize for economics, famously remarked, “You can see the computer age everywhere but in the productivity statistics.”
Solow’s famous “productivity paradox” debate has re-emerged in recent years as digital technologies have come to the fore and economists debate the real impact of developments such as cloud and mobility.
That impact drew the attention of participants at The Australian Financial Review Change Agenda round table recently, with partner at Orchestrate Malcolm Alder, saying such questions are still being debated today in businesses.
“In the place I used to work there was a conversation about the level of investment going into iPhones and other devices, and the question was raised, ‘We’re not actually seeking an increase in productivity based on all this money we’re spending on all these devices.’
“So I posed the question: ‘Well, if you think that’s the case, I’ll invite all of you to park your phone over there and leave the room and carry on with your job.”
Alder suggested that one reason why a lot of productivity benefits from developments such as mobility don’t show up in the data is because those benefits come in such small increments.
“It’s 20 seconds here or 30 seconds there,” he said. “I don’t think those kinds of improvements are picked up all that well in the data at the moment.
“The bush economist in me knows that productivity overall for the nation is a function of three things. It’s population, which is only a function of the births versus the deaths rate and immigration policy. It’s participation, which is things like how do we get more mums at home and older people who want part work more engaged in the workforce.
“And the third piece is pure productivity; what are the outputs that we are getting for the inputs that we are putting in.”
According to Alder, “Mobility is not going to do much about the population. But it’s an absolutely critical component of pure productivity, and also of the ability for more people to participate in the workforce on a basis that works for them.”