Australia’s labour productivity fell 0.7% in 2024, placing the country 29th out of 39 advanced economies on this key measure. New Zealand sits higher on the table, showing how Australia’s relative performance has weakened.
The OECD also highlights a chronic investment gap, with research and development spending a central concern. That mix of lower productivity and underinvestment raises questions about future income growth.
OECD figures show Australia directed just 1.1% of gross domestic product into research and development in 2024. That level ranks 25th out of 34 advanced economies tracked by the organisation.
It also amounts to roughly one-third of the United States’ R&D effort, which stands at 3.5% of GDP. Australia is relying on past strengths rather than building the next wave of innovative industries.
Analysts point to the past eight years as a period of consistently weak productivity gains that has started to drag on household living standards. Sluggish output per worker tends to cap wage growth and limits how far public services can expand without higher taxes.
The relatively low R&D spend signals fewer commercial breakthroughs in sectors that drive high-value jobs. Combined, these trends show an economy that risks falling further behind peers unless investment in innovation and efficiency improves.
