Small businesses in New Zealand are consistently behind our commonwealth comparators in terms of productivity. Photo / 123rf
Small businesses in New Zealand are consistently behind our commonwealth comparators in terms of productivity. Photo / 123rf
New Zealand’s small businesses are less productive than those in Australia and Britain, according to new research from Xero.
The company has released its first small business productivity measurement, backed by data from Xero’s small business insights programme, which tracks performance in Australia, New Zealand, Britain, the US and Canada.
Xero’s data calculates the dollar amount produced per hour worked for a typical employee in a small business.
In the March quarter, small business labour productivity averaged $74 per hour worked, down from $75.30 per hour in the December quarter.
This was broadly in line with the prior six months of $74.50 but remains below the long-term average of $76.30.
That figure compares with Australia, which has a long-term average of A$83.50 ($101), and Britain, which has a long-term average of £38.80 ($89).
Productivity per employee also softened, averaging $9168.90 per worker in the March quarter, down from $9389.30 in the previous quarter, and sitting close to the long-term average of $9137.
Bridget Snelling, Xero country manager for New Zealand, says lifting productivity needs to be a long-term priority.
Bridget Snelling, Xero country manager for New Zealand, said while it was positive that productivity was not substantially declining, the lack of meaningful improvement remained a concern.
“It’s disappointing we’re not seeing the kind of improvement needed to lift the small business economy,” Snelling said.
“Falling behind international peers like Australia and the UK is a reminder that lifting productivity needs to be a long-term priority.”
International small business insights comparisons show New Zealand’s productivity continues to trail Australia and Britain, despite the performance of both those countries fluctuating over recent years.
Snelling said there were clear levers to help close the gap, including digital adoption and process improvements.
Looking at productivity from an industry standpoint, levels varied significantly, with manufacturing ($123.50), construction ($103.70) and real estate services ($120.40) continuing to rank among the most productive.
Hospitality, conversely, remained at the bottom of the rankings by a considerable margin, with $30.60.
Retail trade recorded the strongest improvement over the past six months, with productivity rising 9.1% year-on-year.
The growth reflects retailers increasing sales without a corresponding lift in hours, according to Xero.
As for regional performance, Hawke’s Bay recorded the highest productivity levels because of its manufacturing focus, with a labour productivity average of $87.80 per hour.
Tourism-focused Otago lagged behind other regions at $46.40, although it reported the strongest growth over the past six months, up 7.4% year-on-year.
The country’s largest economic hub, Auckland, recorded a labour productivity average of $79.50 per hour.
Snelling said improving productivity would require continued focus from Government and business.
“Policy settings that support skills development, infrastructure and digital adoption play a key role in lifting productivity across the economy, while targeted attention in lower-performing sectors such as hospitality could help unlock further gains.
“At the same time, small business owners can take practical steps to improve productivity through refining operations and adopting technology. Digital tools, including AI-powered solutions, can automate time-intensive tasks, helping businesses focus more on generating revenue.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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