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Improving service sector productivity: the economic imperative

15 Jun 2017

The vast majority of Australian workers are engaged in the service sector which, in turn, generates the largest component of national wealth; and increasingly we are exporting services. 

In recent times, Australia’s productivity performance has been poor, although this has been mostly the result of cyclical and industry-specific factors. The economic reforms introduced in the 1980s and 1990s have been successful in adding economic flexibility and improving Australia’s competitiveness. However, those reforms largely ignored a significant part of the service sector, particularly the non-market sectors of education and healthcare. 

Australia’s long term economic prosperity is heavily reliant on productivity improvements. CEDA has been calling for a National Productivity Policy that addresses rigidities in the economy, incentivises innovation and improves the capability of its human capital – including in the education and health sectors.

It is of crucial importance that the service sector improves its productivity performance. In analysing this issue, CEDA aims to assess the role of the service sector and showcases examples of policy reforms and case studies including key policy learnings from these examples. 

The report aims to discuss policies and areas that could contribute to an improvement in the service sector productivity performance in order to sustain Australia’s economic growth.

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