Responding to those pressures is not easy. A common theme from the Bank’s liaison program in recent years has been the heightened focus on reducing costs and improving productivity in response to the subdued growth in demand. In more extreme cases, however, it involves businesses that are not sufficiently productive going out of business and workers losing their jobs.
What more could be done to secure strong productivity growth? As others have noted before me, the experts at the Productivity Commission have put together a “list” of what could be done.8 The list describes how improvements to incentives, capabilities and flexibility could enhance productivity.