Auckland accounts for 38 percent of the NZ economy, but labour productivity in the city dropped 1.2 percent from last year. File photo. Photo: 123rf
Urban centres are leading a decline in small business labour productivity, with all regions and industries seeing some decline over 2023, according to a new report.
Xero Small Business Insights' report found national average labour productivity fell 6.1 percent last year, with agriculture down the most at 12.1 percent, followed by hospitality at 9.2 percent.
"Peeling back the layers on small business productivity for the first time like this gives us a better idea of where the biggest opportunities are for gains that will benefit both small businesses and our economy overall," Xero country manager Bridget Snelling said.
"We should pay particular attention to the productivity decline recorded in Auckland - our largest city. It accounts for 38 percent of the New Zealand economy, making it a concerning barometer for the country's overall economic outlook."
She said a recent survey indicated New Zealand's productivity was sitting below the OECD average.
"It is telling us a really scary story that productivity is falling, and we absolutely need to be taking action, as a nation to drive our labour productivity up," Snelling said.
All the main centres recorded negative labour productivity with a 1.2 percent for Auckland, 2.2 percent down for Canterbury and 6.7 percent decline for Wellington.
On the plus side, Northland saw post-pandemic productivity growth of 5.8 percent, followed by Waikato at 4.5 percent and Otago and Hawke's Bay both up 1.9 percent.
Of the eight industries tracked by the survey, five had productivity levels above the national average led by real estate services.
The hospitality industry had one of the largest drops in productivity in 2023 at 9.2 percent. Snelling said hospitality's underperforming productivity was bleak news for the struggling industry.
"What's really concerning for hospitality is that it was the most underperforming sector when it comes to productivity. So at a national level, our productivity is around $100 an hour. Hospitality is sitting at $14.30 an hour. That's problematic," she said.
"And then we've got some industries such as real estate leads the pack, sitting above the national productivity level at $125 an hour. So it's a really important thing for us to be looking at as a country, and to be thinking about how we can drive productivity up."