Xerothe Global Small Business Platform, today released new economic information revealing that Kiwis generate significantly less output for every hour worked than the most productive OECD countries.
The last knowledge
from the New Zealand Institute of Economic Research (NZIER) show that New Zealanders are working more hours, ranking eleventh out of 34 countries for the average number of hours worked per worker.
These long hours do not bring as much value to Aotearoa compared to its international counterparts.
Bridget Snelling, Xero New Zealand Country Manager, says NZIER information shows the country’s labor productivity is below the OECD average and is running less than half of the most productive nation, Ireland. She says New Zealand has a great opportunity to improve productivity through digitalization.
“Every day, New Zealanders work more than our international counterparts, with significantly less work per hour. In fact, Kiwis would have to work 20% more to reach the OECD average GDP. For Kiwis working a 40-hour workweek, that equates to working an extra day a week to close the labor productivity gap, and that’s just to hit the average productivity mark.
“For business owners, this would equate to hiring one more employee for every five current employees. It’s an almost impossible challenge right now, given the tight labor market,” says Snelling.
NZIER has broken down the overtime needed to match the output of the most productive OECD countries.
“The Irish are world leaders in GDP productivity per hour. For Aotearoa to match this production at our current productivity rates, Kiwis would need to work an additional 10.7 hours per day, for a staggering total of 53.4 hours per week.
“Obviously that’s impossible, but it begs the key question: what do New Zealand companies need to do to close this gap and accelerate productivity?” Snelling adds.
Digitization is an important element
Snelling says it is clear there is a productivity problem in Aotearoa and that getting more people to work longer is not the solution.
“Kiwis aren’t afraid of a little hard work, especially those in the self-made small business sector. But these sobering numbers make it clear that we can’t just put our heads down and fight our way to better productivity.
“As a nation, we need to make the most of the hours we put in. To do that, we need to think long term and act.”
Productivity is complicated by many contributing factors, the increasing digitization of businesses is a key one.
Xero and NZIER have economic research that shows a 20% increase in cloud computing adoption could boost New Zealand’s GDP by $3.5 billion to $6.2 billion through labor savings and productivity improvements.
The government has set up the The DigitalBoost website to help small businesses start their digital journey. To further encourage small businesses to get started, Xero is asking the government to implement a program similar to comparable economies such as Australia and Singapore, where SMEs can deduct a percentage of their investment in adopting digital technologies. .
Snelling says, “Right now, businesses in Aotearoa are spending a lot of time on tasks that can be automated or done more efficiently using an app. We need to make sure that every hour spent working is doing something that only a human can do, it will unlock huge productivity gains.
“Some small business owners may think their business is not suited for cloud-based applications and tools, but there’s more than 1000 apps connected to Xero alone, many of which are specifically designed to help specific industries. If you want advice on which apps will best support your business, try talking to your accountant or bookkeeper,” says Snelling.
The advantages of electronic invoicing
Adopting e-invoicing is an important step towards digitizing Aotearoa’s businesses.
The Ministry of Enterprise, Innovation and Employment (MBIE) published information on the benefits of e-invoicing for Kiwi businesses.
Snelling says that despite its simple name, e-invoicing is not limited to online invoices. It is a booming technology that is changing the way businesses are run around the world.
“Electronic invoicing automates the sending, receiving and payment of invoices. With 280 million business-to-business invoices exchanged in New Zealand each year, the government estimates our economy could save $4.4 billion over the next 10 years.
“The benefits of electronic invoicing include faster payment times, which improves cash flow, reduces administrative and human errors, improves online security and much more. It also provides direct savings with an e-invoice that costs businesses less than half of a traditional invoice. »
Snelling says digitalization isn’t the only answer to Aotearoa’s productivity challenges, but it’s something self-made businesses across the country can immediately start looking into.
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