KEY POINTS:
Upgrades, outsourcing and new technology are just some of the suggestions New Zealand's small and medium enterprises (SMEs) are making to improve the country's lacklustre productivity.
They are contained in the latest Mood of the Boardroom survey, which also reveals that nearly six out of 10 SMEs would
be prepared to match Australian pay rates if they were linked to better productivity.
Employers generally agree that New Zealand workers are poorly paid compared with Australians but say there is limited scope to act unless productivity improves dramatically.
Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson (pictured) said living standards could not be lifted unless productivity was raised. "It is not about people working harder, it is about people working smarter.''
He said greater investment in staff training was needed to get the best out of employees. "A lot of firms will introduce a CRM [customer relationship management] system but not invest in staff training.''
Thompson welcomed the company tax cut announced in the Budget, saying it would allow companies to retain earnings for investment.
Business Roundtable executive director Roger Kerr said business productivity had been abysmal lately but had escaped official attention.
"I have been critical of the Reserve Bank because of its recent focus on housing,'' he said. "Inflation comes from printing too much money.''
Kerr said Government efforts to cut compliance costs by amending legislation such as the Resource Management Act and the Local Government Act were
"minuscule stuff'' among the hurdles business faced.
"If you look at Budget, the projection for business investment over the next four years is weak. That tells me it is not an economic environment for business investment. New Zealand has lost ground in a shocking way since 2000 - the biggest decline in competitiveness in the OECD. The exchange rate has been the biggest factor but regulation has been a cost to the economy.''
Mike Hollier, co-founder of Auckland biotech company Vital Food Processors, said exchange-rate volatility was a major challenge and stability would come only if New Zealand adopted the euro, the US dollar or a basket of Asian currencies.
Business New Zealand chief executive Phil O'Reilly said businesses wanted to do things for themselves rather than receive government handouts.
"The No 1 thing companies can do [to increase productivity] is increase skill levels. They may not be strong enough to make big capital spending but something they can do is give themselves and workers new skills. They can invest in their own skills.''
