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Mining productivity drops

LABOUR productivity in Australia staged a comeback in the December quarter after a poor start to the financial year but the mining sector lagged behind the agriculture and services sectors, according to PricewaterhouseCoopers.

Kristie Batten
Mining productivity drops

PwC today released its quarterly Productivity Scorecard, which showed a 0.7% rise in productivity in the December quarter, compared with a 0.6% drop in the September 2011 quarter.

Economist and PwC partner Jeremy Thorpe said productivity in the agriculture and selected services sectors rebounded during the period.

“We expected to see fewer hours worked in the services sector over the December quarter as this period coincides with traditional holiday periods,” he said.

“However, the sector was able to maintain strong output figures despite the reduction in labour hours, leading to a positive labour productivity result.”

Thorpe said the December quarter was traditionally strong for agriculture, which bounced back after a particularly poor September quarter.

Labour productivity in the agriculture, forestry and fishing sectors jumped 5.1%, while the professional, scientific and technical services sectors contributed growth of 4.5%.

Productivity in the utilities sectors declined by 4.2% while mining productivity dropped 1.4%.

The worst affected state was the mining powerhouse Western Australia, where productivity dropped by 2.1%.

A 9.9% jump in construction productivity wasn’t even to offset a 4.5% drop in mining productivity in WA.

“Although productivity performances between the two sectors differ, they continue to be part of the same story,” Thorpe said.

“The continuing expansion in Australia's mining capacity has led to growth in construction output as the mining sector requires the construction of infrastructure such as dams, roads and other supporting infrastructure.”

According to PwC, labour is more productive in mining than any other sector, but mining productivity has fallen by 50% since 2001, while productivity across other sectors has grown by around 20% in the same period.

PwC said declining productivity would ease once big resources projects entered full-scale production, which in some cases could take up to 10 years.

PwC energy, utilities and mining leader Jock O’Callaghan said the mining industry boasted the lowest underemployment in Australia and suffered from a chronic skills shortage.

“As the industry continues to ratchet up investment the skills shortage is set to worsen and prove a further drag on productivity,” he said.

“At worst, this essentially means Australia as a nation may fail to capture the full benefit of what is arguably the biggest resources boom in history.”

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