# Productivity

Dynamic economy that shares prosperity

## Metric

The current 20-year average labour productivity growth compared to the 20-year average growth 10 years earlier

## Why this matters

Labour productivity (GDP per hours worked) indicates economic efficiency.

Labour productivity is a driver of economic growth, real wages, and overall living standards.

Short term movements in productivity are subject to volatility, so it is most appropriately examined by considering trends over time.

## Progress

Long-term labour productivity growth (based on 20-year average annual growth rates) was steady between 2003-04 and 2015-16, but has slowed since then.

In 2022-23, the 20-year average annual growth rate was 0.9%. It has:

- fallen from 1.2% in 2021-22
- fallen from 1.8% in 2003-04.

Average annual growth rate — specifically compound annual growth rate [CAGR] — is defined as:

\({\displaystyle \mathrm {CAGR} (t_{0},t_{n})=\left({\frac {V(t_{n})}{V(t_{0})}}\right)^{\frac {1}{t_{n}-t_{0}}}-1}\)

where \({\displaystyle V(t_{0})}\) is the initial value, \({\displaystyle V(t_{n})}\) is the end value, and \({\displaystyle t_{n}-t_{0}}\) is the number of years, in this case, 20.