During the 2008 Election Campaign, National Party leader John Key stated that his aim for New Zealand, economically, was to catch up with Australia. The National Party was subsequently elected to govern and now, three years on, the gap between New Zealand and the rest of the Organisation for Economic Co-operation and Development (OECD) Countries, including Australia, has widened. Two factors influencing this gap that is discussed often by financial and economic commentators is New Zealand’s low productivity and its untapped ability to innovate.
As a ‘first piece of the pie approach’, the New Zealand Government could start by incentivising employers to adopt a more flexible approach to the workplace and in- turn, increase productivity and foster innovation. Maybe then we would be in a much better position to achieve that stated goal from 2008, and catch up to Australia.
Problem
As stated in the New Zealand Treasury Productivity Paper 08/09, “one of the biggest challenges facing New Zealand is its productivity shortfall relative to other OECD countries: New Zealand is currently ranked 22nd out of the 30 OECD countries in the productivity league table and an hour worked in New Zealand typically generates 30 per cent less output than an hour worked in Australia”. (New Zealand Government, 2008)
Increasing New Zealand’s productivity basically means getting better at producing goods and services that the world wants and getting paid more for them but for that to happen, New Zealand will need to become more innovative.
Innovation, which is defined by the Encarta English dictionary “as the act or process of inventing or introducing something new”, is something that New Zealand has a long history of, especially as a result of its comparatively short existence as an inhabited country, as well as its distance from the rest of the world (Le Pla, 2010). From the early Māori with innovations such as the kopa, also called a tāwiri, an invention for squeezing the juice from tītoki berries (Derby, 2010) through to Henry Shacklock’s popular Orion stove, which burnt local lignite coal effectively, and Thomas Edmond’s baking powder (Hunter, 2010), New Zealanders are known for being innovative but often the point that a catalyst for innovation is problem-solving is over-looked.
The 2006 Census Survey indicated that 86% of New Zealand’s population live in urban centres. ( Statistics New Zealand, 2011) Urban centres in New Zealand tend to have a Central Business District which is often separated from the outer lying residential suburbs.
As a result of this central business district model with outer suburbs being the location of choice for most residents, the New Zealand labour force is less productive than it could be through the wastage associated with travelling to and from work. Commuting to a central business district also means the labour market are spending less time in an environment where they can identify problems associated with their day-to-day lives and subsequently, they have less time to consider better ways to do things. This has a negative effect on the ability of the workforce to come up with innovative ideas associated with the development of goods and services the world wants, and is willing to pay for. A century on from the end of the Industrial Revolution, New Zealand’s number one export product in economic terms is still something New Zealand first exported in 1846 – Dairy products.
Solution
A solution worthy of consideration, if the New Zealand Government is serious about the country becoming more productive and innovative, is to consider incentivising New Zealand employers to encourage their employees to spend more time working from home or “teleworking”.
A flexible work place will be more likely to encourage innovation, especially in a New Zealand context, as employees will be spending more time in a consumer environment where they can identify problems and develop solutions. We often refer to this as the Number 8 wire mentality, which Wikipedia describes as a “mentality, which holds that anything can be made or fixed with basic or everyday materials, such as number 8 fencing wire. New Zealanders seen as embodying this quality include Burt Munro (subject of The World's Fastest Indian) and Richard Pearse, who some believe achieved flight before the Wright Brothers”.
As well as the added innovation, experiments with distance workers show that distance working workers actually concentrate better at home than they do in traditional work place environment, thus making them more productive (Paul Vos, 2002).
Practical Impact
The key to this initiative is an effective information technology (IT) network. Without that, the benefits of teleworking or ‘working from home’ are negligible. In addition to a workers productivity and ability to stimulate innovation, the cost advantage to an employer is the reduction in overhead costs associated with centralised office space. Baruch (2000) even goes so far as to suggest that there is a transfer in the overhead cost from the employer to the employee through the use of electricity, gas and often internet access. Baruch and others also go on to highlight further benefits to employers though productivity gains but also the reduction in absenteeism.
First Steps
The first step to initiating this change would be to develop appropriate case studies that could be used to highlight the advantages of the introduction of widespread workplace flexibility in a New Zealand context. In that case study, major issues could be discussed relating to organisation type and size, job roles, task identify and interdependence, information technology infrastructure and the characteristics of the New Zealand household which would then be linked to the state of the New Zealand business environment, so that an appropriate level of incentive could be arrived at.
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