Australia’s productivity appears to be lagging behind other OECD nations, ranking second last, just ahead of Mexico.Economists and policymakers are raising alarms about the country’s slow labour productivity growth, which fell by 0.7 per cent in the December 2025 quarter, well below historical averages.The Productivity Commission has noted that productivity growth has stalled since 2016, prompting calls for coordinated policy reforms.

Treasurer Jim Chalmers emphasises boosting productivity in the federal budget as a way to lift wages and living standards, including reducing regulatory costs and supporting innovation.However, experts argue the problem may lie in outdated metrics.

Lauren Ryder, CEO of Leading Edge Global, suggests that traditional productivity measures, developed for a mining and manufacturing economy, fail to capture outputs in the modern service, education, and care sectors.She coins the term 'phantom labour' to describe valuable work that remains invisible in current productivity frameworks.

Ryder warns that the gap between measured outputs and actual work is growing, not because Australians are less hardworking, but because the tools used to evaluate productivity no longer match the realities of a knowledge and service-driven economy.Reforming how productivity is measured is seen as urgent to reflect true workforce contributions and inform better economic policy.