Multifactor productivity (MFP) statistics provide a measure of changes in technical progress/efficiency. These measures are used by both government and private organisations to help gauge the effect of changes in work practices, technology, education and training.
MFP is the ratio of a measure of output to a combination of two or more factor inputs. In simple terms, MFP represents that part of the change in production that cannot be explained by changes in the measured inputs.
MFP statistics use industry GVA (in volume terms) as the measure of output. Two inputs are used - labour (hours worked) and capital. Capital inputs are a flow measure based on the productive capacity of capital.
This means that MFP largely represents the effects of technical progress, improvements in the work force, improvements in management practices, and economies of scale. MFP can also be affected in the short to medium term by other factors such as the weather, and by variations in capacity utilisation.
MFP measures are calculated for the market sector, an industry grouping comprising the following industries: Agriculture, forestry and fishing; Mining; Manufacturing; Electricity, gas and water supply; Construction; Wholesale trade; Retail trade; Accommodation, cafes and restaurants; Transport and storage; Communication services; Finance and insurance; and the Cultural and recreational services industries. These are industries with marketed activities for which there are satisfactory estimates of the growth in the volume of output.
MFP statistics are available only for the market sector as a whole. During the period 1998-99 to 2003-04 (the last completed productivity cycle), the average annual rate of growth in MFP of the market sector (on an hours worked basis) was 1.1%, less than half of the 2.3% average annual rate of growth in MFP for the period 1993-94 to 1998-99 (the previously completed productivity cycle) (graph 15.10).
15.10 Multifactor productivity of the market sector(a)(b) -
1993-94 to 2005-06
Although MFP is the more comprehensive measure of productivity, the ABS also produces industry labour productivity indexes. Labour productivity is defined as gross value added per hour worked.
Graph 15.11 shows the average annual rate of growth in labour productivity for market sector industries over the period 1995-96 to 2005-06. Over this period, the average annual growth rate of labour productivity for the market sector as a whole was 2.4%.
Most of the market sector industries increased their labour productivity. Over the period 1995-96 to 2005-06, the industries with the highest average annual growth rates in labour productivity were Agriculture, forestry and fishing (5.8%), Communication services (5.4%), and Wholesale trade (4.1%). Negative growth was seen in the Mining (1.9%), and Electricity, gas and water supply (0.4%) industries.
15.11 Gross value added per hour worked(a),
market sector industries -
1995-96 to 2005-06