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Print Article16 July 2012 7:15am

 HR professionals should provide oversight and advice about position descriptions, but managers should ultimately “own” them, says HR consultant Michael Sleap.

Many people – and particularly managers – aren’t aware of the benefits of having good position descriptions (PDs) in place, he tells a webcast recorded for HRD Plus subscribers.

“The benefits aren’t well understood or well communicated, especially in organisations where PDs are seen as a bureaucratic form-filling exercise, or even a compliance exercise. The benefits and the ‘why’ tend to get lost in that message.

“So HR professionals have a really important role of trying to educate managers and employees about the benefits of PDs, and selling that into the organisation as well.”

The biggest benefit of having PDs in place is the role clarity it provides for employees, says Sleap, a principal consultant at Right Management.

“People who have role clarity are much more likely to be engaged with the work they’re doing and with their organisation, and we know that high levels of employee engagement drive better business results.

“Role clarity is something that virtually all employees are craving – to be clear on what they’re accountable for, and have that set of shared expectations with their manager – so you set people up for success when they first move into a role. But also review it on a regular basis so that those expectations that were set up when they moved into the role in the first place are still actually current.”

The next big benefit of well-drafted PDs is that they align employees’ work with the strategy of the business, Sleap says.

“That can create even further engagement for employees, because if they can see how their work fits into the overall business strategy and how their work contributes to the results of the business, then that’s going to improve their engagement levels as well.”

Further, he adds, “if [employees] understand the alignment between their role and the business strategy, they’re more likely to focus on the highest-priority work”.

Finally, PDs underpin other important people processes in an organisation. “It’s really important to get the PD right… for things like recruitment and selection, onboarding processes, performance management, and so on.

“On the performance management side of things, it can be a lot harder to write your performance objectives if you haven’t really clearly defined the accountabilities of the role in the first place.”

The costs to a business of not having an effective system for managing PDs can be great, Sleap warns.

“One of the big costs of not having position descriptions in place is underperformance… What we see in some cases is that an organisation has identified an employee is not performing to the right standard. What might then happen is the manager or the HR team goes and writes a PD.

“What that indicates is the process is around the wrong way. The fact the PD wasn’t there in the first place means there wasn’t clear and shared expectations of performance. If the PD had been there, perhaps there wouldn’t have been that performance issue detected. Really, without having a PD in place you’re exposing yourself to the risk of underperformance unnecessarily.”

It is also harder to defend unfair dismissal and other claims without a PD, he adds.

“Having an up-to-date, clearly defined and signed off position description can be a really important document to have in place.

“That can be a motivating factor for some managers, to put the work into the PDs early on, and mitigate the risks associated with things like industrial law.”

Sleap points out that most organisations would not engage a consultant for an $80,000 assignment without defining what the person is accountable for and what they need to deliver.

“If you flip that around to an ongoing employee, quite often there’s not that same thought put into what that person’s role is, what they are accountable for, and it might not be reviewed on a regular basis. There’s a lot of investment going into your employees. How can you afford not to ensure that their work is really well defined and you have role clarity in place for all of them?”

Whose job is it?

Position descriptions are similar to most other HR processes, Sleap says, and organisations should have in place an effective system to manage them.

Exactly who should write the PD tends to be a contentious issue, he notes.

“Most importantly, it needs to be a partnership between employees and their manager. That’s the most important part of the whole PD process; that’s how you get value from position descriptions. You have the employee and the manager sit down and discuss the aspects of the role, and particularly identify any areas of the role that are unclear. It’s important to identify those unclear areas early on, either for a new hire or, say, at the annual review process. It’s those areas of lack of clarity that can lead to problems down the track.”

With this established, “it doesn’t really matter who writes the PDs, as long as the discussion takes place”, he says.

It is, however, vital for line managers to “own” the final PD.

“It’s not good enough for a manager to say to the employee, ‘You go and draft your PD, write it up, and I’ll fire it off’. That’s not how you’re going to get role clarity, and it’s not how you’re going to get engagement as well.

“The manager needs to own the final product. It doesn’t mean they need to do all the work, but a manager is accountable for an employee’s performance and therefore needs to be involved all the way through.

“What HR is left to do is play an advisory role, and a quality control role, and to coach managers and employees through the process as well. They become the experts for advising and supporting, but not doing all the work for people.

“The big advantage of that is it keeps the ownership within the line, rather than PDs being owned by HR.”

Sleap outlines what a PD should – and should not – include, and how to set up an effective system for PD management, in this Click here for information about upgrading your subscription.

17 July 2012 7:18am

 A senior corrections officer who was dismissed following his third domestic violence conviction has been reinstated, after a tribunal found an insufficient connection between his out-of-hours conduct and his job.

The case is a useful reminder of factors to consider when disciplining employees for conduct that occurs outside of work hours, say the Lander & Rogers workplace relations and safety team in a recent Bulletin.

The worker in question was a senior corrections officer at Goulburn Correctional Centre.

After his third conviction for domestic violence, his employer – Corrective Services NSW – terminated his employment.

The worker sought reinstatement.

According to the Bulletin, the employer based its decision on two grounds:

    1. that the worker’s history of criminal offences was fundamentally incompatible with the role of a corrections officer, whose role involved upholding the law, and with public service employment generally; and

  1. that as a result of his criminal history, Corrective Services had lost trust and confidence in him.

In the NSW Industrial Relations Commission, Commissioner Elizabeth Bishop ordered Corrective Services to reinstate the worker and pay back his lost wages.

“Central to the Commission’s reasoning was the fact that Corrective Services had failed to show a sufficient connection between [the worker’s] convictions and his employment, or that his convictions would have an adverse impact on the integrity or reputation of Corrective Services,” the Bulletin says.

The worker acknowledged that his convictions had the effect of tarnishing his employer’s reputation and integrity, but Commissioner Bishop held that this acknowledgement was only his opinion, and wasn’t determinative.

Landers partner Neil Napper says third-party evidence of reputation damage was lacking.

“Media comment or feedback from third parties, whether they’re suppliers or customers or clients of the organisation would be typical examples [an employer could rely on].”

The problem is that seeking out such evidence – if it isn’t forthcoming – involves publicising the situation, which would be like “cutting your own throat”, he says.

The Bulletin also notes that the Commissioner rejected the employer’s assertion that it had lost trust and confidence in the worker.

“No reasons were given for the [employer’s] assertion, nor was it supported by evidence,” the Bulletin says.

In fact, the Commissioner drew attention to the worker’s “totally unblemished work history”, his dedication, and the commendations he had received during 15 years of service.

“This case demonstrates that the mere fact that an employee has engaged in reprehensible, and even criminal, conduct does not automatically give an employer the right to take disciplinary action,” the Bulletin says.

“A sufficient connection with the employee’s employment is required.”

Avoid surprises

Napper says that the appropriate response to out-of-hours misconduct comes back to the employer’s policies and procedures.

“For example, is there a disciplinary policy that deals with these sort of infractions? What does it say? What sort of powers does it give or purport to give to the employer short of dismissal? Could there be a demotion? Could there be some sort of final warning? What does the policy provide for? Has that been communicated to staff? Are they aware of it?

“This all goes to the notion of fairness,” Napper says.

“If and when the employer wants to take action, will they be seen as acting in a fair and reasonable way?”

These days, any disciplinary action can be the source of counter action by employees or their unions, Napper warns.

“In order to make sure you get it right as an employer, you really need to make sure that any step you take doesn’t come as a surprise to the individual.

“The general test is if it’s going to be a surprise then you’ve probably got it wrong,” he says.

Drawing on other key cases, the Landers team offers three tips for employers regarding out-of-hours conduct:

    1. Ensure that clear policies are in place concerning the conduct of staff while they are in uniform or travelling for a work-related purpose. The importance of the policies should be clearly impressed on employees, and the consequences for breaching a policy should also be made clear.

    1. When contemplating disciplinary action against an employee for their out-of-hours conduct,
      consider whether it occurred while they were in receipt of any allowance or other benefit. That won’t necessarily be a determinative factor in establishing the fairness of subsequent action, but it could be relevant.
  1. Before taking disciplinary action for an employee’s out-of-hours conduct, consider whether the conduct could reasonably be expected to damage the company’s reputation, or otherwise expose it to liability.


Originally published in

There’s an industry which has confronted sweeping job losses recently, and it’s nothing to do with making cars or aluminium. A Crikey analysis has found that 38,000 jobs have been culled from the state and federal public service over the past few years, and a further 24,000 positions may follow.

Not since 1996 has the public service seen anything like it; as many as 62,000 public servants – in an arc stretching from Queensland to Tasmania via Canberra — losing their jobs. Anecdotes abound of incessant office farewells, of teams reduced to skeleton staff, of bureaucrats reapplying for their jobs while the headcount shrinks.

So is this a case of “public service bashing” as premiers look for the easiest way to tighten their budgets – leaving the public with substandard services? Or is it a justified way to balance the books after a halcyon era of bureaucratic expansion?

James Whelan, research director of the Centre for Policy Development’s public service program, says there’s been nothing like it since John Howard cut a third of the public service in 1996. “There are times when the public service is cut dramatically, this would appear to be one of them,” Whelan told Crikey.

The cuts have hit hardest among state bureaucracies, partly because new conservative governments are seeking to demonstrate their fiscal prudence. NSW has cut an estimated 15,000 jobs, while 7500 have gone in Queensland. South Australia is cutting 5150 jobs, Victoria 4200, and Tasmania just under 2000. (These numbers refer to announced job cuts; not all have been implemented yet.)

Federal cuts are proportionally smaller, with 4200 jobs going in 2012-13 — but the Coalition has pledged to make a further 12,000 bureaucrats redundant over two years if it wins the election, due next year.

Governments say almost all positions have been vacated through natural attrition, non-renewal of contracts and voluntary redundancies. Experts predict some cuts will not be voluntary in the future.

Premiers say they are culling jobs to master deficits in tough financial times; bureaucracies are bloated and must make do with less. Whelan rejects the austerity argument, saying Australia has a low national net debt and sacking public servants won’t stimulate the economy anyway.

Whelan says Australia under-invests in its public service compared to OECD countries, and shrinking the bureaucracy affects government services, program delivery, policy advice, and financial management. He sees it as a counterproductive move stemming from an ideological desire to scale back government — and bureaucrats make an easy target because of the misconception that they don’t do much.

“We’ve probably become a little accustomed to public service bashing,” Whelan said. “It’s like the public sector has few outspoken allies or advocates. To the extent that that’s true, the public sector is vulnerable.”

Geoff Gallop, director of the University of Sydney’s graduate school of government (and former WA premier) says the public service boosts economic development, and cites the importance of having enough departmental staff in the early days of the West’s China-led resources boom. Gallop cautions premiers to think twice about slashing public expenditure as the prospect looms of a Europe-led GFC mark 2.

“It’s just too easy to say ‘let’s cut the public sector’. We need a more sophisticated discussion; we’re not getting it. They’re just slashing, and I don’t think that’s a very sophisticated way to proceed,” Gallop told Crikey.

Unions, perhaps sensitive to a lack of public sympathy for the country’s 1.9 million bureaucrats, are focusing on the impact on services. CPSU national secretary Nadine Flood warns there will be longer waits for services and payments; Centrelink call centres are taking up to 90 minutes to pick up — there are reports of some clients falling asleep on the phone — and the baby bonus can take 70 days to process.

Flood says about 75% of federal staff losses are through attrition, with the rest voluntary redundancies. There have been some forced redundancies at state levels.
“It is a tough time to be a public servant. There is a real fear amongst many areas of our membership about what their future holds,” Flood told Crikey.

The union is worried about jobs in regional areas like Geelong, Wollongong, Hobart, Launceston, Wagga Wagga and regional Queensland. Cuts to specialist areas like the CSIRO is leading to a brain drain overseas.

And unions are gearing up for a fight with the Coalition if it wins the federal election. Flood notes that for the Coalition to balance its books and deliver its promises — scrapping the mining and carbon taxes, posting larger budget surpluses than Labor, etc — it would have to sack more than the 12,000 public servants Joe Hockey talks about.

So how much fat was there to cut? Stephen Bartos, an expert in public policy and governance (and executive director at ACIL Tasman) says the cuts are not necessarily a bad thing. But he concedes public servants get a raw deal when compared to the fuss made of cuts to the automotive and defence manufacturing sectors.

“It generally comes down to a political calculus; if you’re a manufacturing plant in a marginal seat you’re a bit more likely to find yourself getting government assistance. Public sector cuts? Bit different,” Bartos told Crikey. “There is a degree of taxpayer resentment of the public service.”

However, Bartos points out that premiers like Newman have a mandate to shrink the bureaucracy. He says that from time to time the public service needs a clean-out. He cites NSW, where he says the bureaucracy does not currently have a strong reputation for competence.
“There’s a demonstrable need for change,” he said. “These [job cuts] aren’t always bad things … it’s not all negative.”

Bartos points to the concept of “creative destruction” — where some industries have to shrink or die in order to allow new, innovative industries to boom, as part of the inexorable march of capitalism. (The concept does not seem to have been applied in any great rigour to cars or aluminium, mind you.)

And Bartos says with national unemployment sitting just over 5%, many bureaucrats will find new jobs. They are well-trained in skills needed in the services industries IT and communications skills are in high demand, including in regional areas. And there is an increasing amount of movement between the public, private and not-for-profit sectors — that can be a good thing, according to Bartos.
“The days in which the public service was a career for life are probably gone,” he said.

Bartos may be putting on a brave face but he is concerned about the loss of the most capable and employable bureaucrats — who are often first in line for redundancies — and the ensuing loss of talent and corporate memory. A new generation of managers may not know how to handle job losses while managing morale.

Opinions may differ as to the wisdom of culling 38,000 public service jobs (with another 24,000 on the line), but Crikey’s experts agreed on one thing: cuts on this scale are very significant and there should be a full and informed debate about whether the cuts are needed, and the trade-offs that are being made in terms of services and capacity. And the debate should go beyond “public service bashing”.

Public service cuts: where the axe has fallen

A Crikey analysis has found 38,000 public service job cuts have been announced at the federal and state levels over the past few years. A further 24,000 positions are on the line (the federal Coalition says it will cull 12,000 positions, while the Queensland government has hinted at a possible further 12,000-20,000 job losses).
Here’s where the axe has fallen …

Federal government:
Job cuts of 4228 announced in 2012-13 budget, to take effect this financial year (this does not include an additional 1154 jobs for Defence military and reservists, because they are not public servants). Largest cuts are to Treasury, Attorney-General’s, and Human Services. Joe Hockey has said if the Coalition wins government it would make 12,000 public servants redundant over two years. Hockey noted there were 20,000 more federal public servants now than there were in 2007; unions expect the Coalition to sack more than 12,000.
Total: 4228 full-time equivalent jobs to be cut, rising to 16,000 if the Coalition wins.

New South Wales:
Some 5000 voluntary redundancies announced in September 2011 (O’Farrell government).
Additionally, the 2012-13 budget set a 1.2% per annum reduction in labour costs across the public service, which unions say equates to 10,000 jobs. The government says nurses, police officers and school teachers will be quarantined, and concedes there is no cap on the number of jobs to go, so it could be higher than 10,000.
The Labor opposition says Treasury documents show 3600 jobs will be cut from hospitals and 2400 from schools and TAFEs over the next four years.
Total: 15,000 FTE job cuts announced since 2011; that may rise.

In May 2011 the former Labor government announced 3500 voluntary redundancies over three years, extending the program in early 2012 to cover an extra 1500 positions. (An estimated 4500 jobs were cut as a result.)
Additionally, Premier Campbell Newman has said about 3000 jobs have been cut recently (most from non-renewal of temporary contracts). About 2000 jobs are to go from Queensland Rail. More cuts are expected in the September budget; Newman has said the state is employing 20,000 more public servants than it can afford, and significant extra cuts can be implemented without reducing services. (It’s not clear whether Newman’s 20,000 figure includes jobs already cut.)
Total: at least 7500 FTE cuts announced since 2011; more expected.

South Australia:
Some 1000 FTE were cut in the 2012-13 budget (cuts to take effect over three years from 2013-14, through voluntary redundancies and natural attrition). This comes on top of 400 jobs cut in the 2011 budget, and 3750 jobs cut in the 2010 budget.
Total: 5150 FTE cuts announced since 2010.

In December 2011 the government cut 3600 jobs; a further 600 cuts were announced in the 2012 budget. So far, jobs have been cut through attrition and non-renewal of contracts. The government recently announced the number of positions to be cut from each department.
Union sources say the Vertigan Review into state finances recommends cuts of up to 7000 (including jobs already cut).
Total: 4200 FTE cuts announced since 2011.

The 2012-13 budget said 1098 FTE jobs had already been cut. The Health Services Union said the budget indicated another 800 jobs would be cut. Labor says it has quarantined health, police and education.
Total: 1898 FTE cuts announced since 2011.

Northern Territory:
The CPSU says the 2012-13 budget cut $300 million from the public service, with agency budgets cut by between 0.75% and 3%.

Western Australia:
Does not appear to be cutting the public service, although there are reports some agencies do not fill their FTEs.

More information

Return to CPSUnews main page

  • by: Amy Wilson-Chapman
  • From: PerthNow
  • July 24, 2012 2:00AM




Source: Supplied

Recommended Coverage

UNDER-INVESTMENT in non-mining sectors and infrastructure could pose a greater risk to Australia than the ongoing economic turmoil in Europe.

That’s the ‘enduring’ warning from Tim Hampton, an economist at BIS Shrapnel, which released its long-term forecasts today .

The “significant under-investment” in non-mining industries could gradually erode the medium-term growth potential of the economy leaving Australia “increasingly sensitive” to large fluctuations in world commodity prices by not diversifying investment, Mr Hampton said.

The organisation forecast “pretty big growth” in the mining industry over the next two years.

And after that, despite reports yesterday the country’s mining boom would be over by 2014, it would plateau at that high level.

“We think commodity prices, even if they fall back a bit, are going to be high enough to kick start the next round of investment projects and that will keep investment at that high level.

“You won’t see more investment, but it will keep investment at that high level,” he said.

As the country’s projects move from construction into production, the nation – particularly WA – would enjoy significant export growth, he said.

That would keep gross domestic product just above 3 per cent for the next five years.

Though the move from construction to production would mean employment growth in the industry might suffer, other industries would flourish.

Mr Hampton said he expected domestically-focused industries such as residential construction to increase – especially with the Reserve Bank of Australia’s recent cuts to the official cash rate.

“When you build a house you employ accountants and lawyers and property managers,” he said, “those industries have really stagnated over a number of years – we’re looking for the growing investment to start picking up late this year.”

The flow on affect of those industries expanding would result in more commercial building as well, he said, helping to provide employment in the construction industry.

And for those industries suffering under a high Australian dollar, such as manufacturing and retail, analysts have more bad news with the currency set to remain a safe haven for investors by remaining strong.

“We’re not looking for the Australian dollar to rise any further,” he said.

Read more:


‘So could the best of the resources boom really be behind us? The answer depends on how you choose to measure it.’….So, are we going to pay attention to the retreat from record sale prices, or are we going to pay attentuon to increased long-term sales volume? or the $AUD 500bn of investment currently being converted into new mining capacity and infrastructure? Perhaps some sections of the business community are using the fear of a slowdown in economic growth to soften the public policy debate about IR and tax reform…

July 24, 2012

Reports on the death of the resources sectors may have been exaggerated, writes Peter Ker.

Freight trains continued to roll along their lonely outback railways, and the shiploaders at Port Hedland continued to pour their rivers of rubble into the belly of giant ships bound for China.

Yet far from this scene of productivity and prosperity, Australia’s resources boom was having its eulogy prepared.

Auditing agency Deloitte predicted the resources sector was just two years away from irrelevance and Australian taxpayers would soon need to find another goose to lay golden eggs.

The comments lit a fire of debate across the nation, despite the fact Deloitte were far from first-movers on the idea.

The federal Resources Minister, Martin Ferguson, and BHP Billiton chairman, Jac Nasser, have both warned recently that certain aspects of the boom had seen their headiest days, and any punter watching the sharemarket in recent times will have twigged that something significant is going on.

So could the best of the resources boom really be behind us? The answer depends on how you choose to measure it.

The resources boom has manifested in many ways, from record commodity prices to extraordinary company profits, from huge export volumes to unprecedented job opportunities for Australian (and foreign) workers.

On some of those measures the boom is undoubtedly on the wane, but on others, the best is seemingly yet to come.

Those with fingers on financial pulses have been lamenting the decline of the boom for some time.

What began with weakness in the off-Broadway commodities like nickel and manganese has started to filter through to headline acts like coal and iron ore – the commodities that deliver the biggest revenue hits to the Australian government.

Benchmark iron ore prices famously topped $US180 per tonne in 2011, but have spent much of 2012 in a range between $US125 and $US150 per tonne, as Chinese demand for the steel-making ingredient has cooled.

Similar declines have struck benchmark prices for both thermal coal and coking coal, both of which are now 30 per cent cheaper than they were just months ago.

”From here on in, the premium prices are gone,” said Minister Ferguson on a recent trip to Perth.

The view is shared by mining companies and the analysts that cover them, with almost every major investment bank revising their commodity price forecasts downward in recent weeks.

In JPMorgan’s case, forecast iron ore prices are now typically 10 per cent lower than previous estimates, meaning prices are expected to remain close to $135 per tonne rather than test $US150 per tonne as previously thought.

Widespread agreement that commodity prices have passed their peak has convinced a bearish investment community that share prices should also bid farewell to their dizzy heights.

Despite the fact companies like BHP, Rio Tinto and Fortescue Metals Group plan to significantly increase export volumes, investors have sold them down to share prices not seen for three and four years.

”If you are judging the resources boom by the stockmarket you would be pretty depressed,” said mining industry veteran Warwick Grigor from Canaccord BGF.

”Certainly from the stockmarket’s point of view the curtains are coming down [on the resources boom], but the stockmarket always looks well into the future and it always overshoots.”

Suspicions the boom was past its peak were reinforced earlier this month when China reported a growth rate of 7.6 per cent: well below the double-digit growth rates of recent years.

The fact that China is forecast to import a bigger volume of iron ore – and several other commodities – every year for the next decade, seemed to gain less traction.

Grigor says Australians should remember the boom goes beyond iron ore and coal, with other commodity prices holding up better than the big two.

”You have still got gold going well, you’ve got copper which looks pretty strong and there is still a big boom in gas,” he said, referring to the LNG boom in WA and Queensland.

Out in the suburbs, average Australians with little direct involvement in financial markets might find it harder to believe claims the resources boom has passed its peak.

The Australian dollar remains well above parity, and the bout of ”Dutch disease” brought on by the strength of the resources sector continues to threaten the jobs of those who work in industries like retail, manufacturing and tourism.

An ever-increasing number of Australians are heading towards the mines and offshore rigs for work, and those that aren’t are being seduced in increasingly creative ways.

In April, Rio Tinto launched a campaign to recruit 6000 workers to its diversified operations, while other companies like OZ Minerals are promoting the concept of a mining career with an inner-city lifestyle: filling billboards with images of fly-in fly-out workers enjoying Melbourne’s laneway cafes.

According to the federal employment department, the number of Australians working in the mining sector is expected to grow by 7.5 per cent every year between now and 2017, when the sector is predicted to employ just under 343,000 people.

That forecast could prove overly optimistic if poor economic conditions prompt companies to abandon some of the $230 billion worth of proposed new projects.

Indeed, some cracks have already appeared, such as Rio Tinto flagging redundancies last week at a coal mine in Queensland, and warning that expansion at another is unlikely to proceed.

But with another $270 billion worth of new projects confirmed as going ahead, it’s clear that in terms of workforce participation, the peak of the mining boom is still ahead.

Amid the varying perspectives on whether the boom has passed its peak, what’s clear is that on every measure, the boom is not over.

Even at their newly lower benchmark prices, the major bulk commodities are fetching prices that are much higher than a decade ago.

BHP’s share price – lamented for hitting a three-year low last week – is still three times higher than it was a decade ago.

The boom may be cooling on some measures, but on every measure, it’s still pretty warm out there.

Read more:


July 23, 2012 – 5:15PM
Academics have come up with a new twist on the adage ‘more haste, less speed’ – speedy decisions can ruin careers, lose money and cost lives. William Leith on the art of procrastination

Mel Gibson ... if only he'd waited.

Mel Gibson … if only he’d waited.

On a hot summer evening in 2006, and over the next few days, Mel Gibson, the actor and film director, did several things that were impulsive. If he’d given himself a moment, and thought about it, he wouldn’t have had that first drink.

Having begun to drink, he would not have continued. Having become drunk, he would not have got into his car. Once arrested, for drunk driving, he would not have made sexist remarks to a female police officer.

We’re always being told to be quicker, or else – to communicate, cook, learn, buy and sell in double-quick time. But Partnoy tells us to slow down. Waiters can be winners

And, having begun to shout abuse, he would have reined himself in before making a series of anti-Semitic slurs. If only he hadn’t done the first thing that came into his head, over and over again. If only he’d thought. If only he’d waited.

In his new book Wait, Frank Partnoy, the American academic, examines the benefits of delay in all sorts of circumstances, and comes up with a new take on an old-fashioned idea: it’s good to wait.

Of course, in today’s world, this feels counter-intuitive. We’re always being told to be quicker, or else – to communicate, cook, learn, buy and sell in double-quick time. But Partnoy tells us to slow down. Waiters can be winners. If you have a day, he says, make your decision at the end of it. If you have five minutes, take four minutes and 59 seconds. And if you have a split second, wait until the very end of that split second; this is likely to result in the best possible outcome. It might even mean the difference between life and death.

Why is it so good to wait? I ask Partnoy, via email, to explain his argument. He’s a professor of law and finance at the University of California, San Diego, and a world authority on financial regulation. He replies the next day. “Given the crush of technology, email, social media and 24-hour news, most of us react and decide too quickly. We’re hard-wired to snap respond to fast, salient stimulus even when it is to our disadvantage.”

In other words, the world has become too fast for us. In his influential 1968 book The Peter Principle, Dr Laurence Peter claimed that corporate employees were always promoted beyond their level of competence, which explains why so many bad business decisions are made. If there were a Partnoy Principle, it might be that the speedy modern world pushes us beyond our natural reaction time; we’re always trying to do things too quickly, which explains why we often make mistakes.

In Wait, Partnoy describes an experiment conducted in 1992 at Stanford University, in which four-year-old children were given a choice. A marshmallow was put in front of them; they could either eat the marshmallow now, or wait 15 minutes, after which they would be given two marshmallows. Researchers met the kids again as teenagers. What do you think happened? Those who waited turned out to be better in various ways: they got better marks, “were less prone to impulsive behaviour” and, according to tests, were “more likely” to be well-adjusted.

After the marshmallow test came a deluge of other, similar tests, with similar results. Patient children don’t often become impulsive teenagers. Which means they don’t often turn into fat teenagers, or drug-addicted teenagers.

Now think of the adults who drink too much, who get arrested for assault, who binge on fast food, who make poor investment decisions, who blow all their money. As children, they would have scarfed down that marshmallow.

The world expert on impulsive behaviour, and decision-making in general, is the Nobel laureate Daniel Kahneman. In his book, Thinking, Fast and Slow, he explains that the brain has two basic decision-making systems: System 1 and System 2. To demonstrate, he shows us a picture of a woman’s angry face. When we see this, he says, we interpret it automatically. We can see, instantly, that the woman is angry. When our brains perform this function, it’s as if we’re not thinking; it’s as if the thought is happening to us. This is what he calls System 1. This is the way impulses work.

Next, Kahneman asks us to do a sum: 17 x 24. To do it, your brain must perform a sequence of actions. These actions feel “deliberate”. You must do complicated things simultaneously; hold one bit of information in your head while you’re calculating another. This is System 2. The answer is 408. How long did you take to get it?

Of course, we need our impulsive thoughts. We hear a bang, and we duck. We run from snakes, fear heights and make snap judgments about distances between objects.

But System 1 is simple, because it evolved in a simpler world – a world without complicated maths, without investment decisions to make, without interest rates to calculate. Also a world without many marshmallows. Or chocolate bars. And this is why, unless you’re an expert, unless you’re the grandmaster playing blitz chess whose gut instinct on a move is likely to be right, System 1 can come a cropper.

A lot of this is down to “anchoring”. If you ask one group of people whether Gandhi was more or less than 114 when he died, and another group whether he was more or less than 35, and then ask both groups to estimate his actual age when he died, the first group will always guess a higher number. System 1 searches for an anchor, and uses it. It can be crude. It can lead you astray. And that’s how illusionists such as Derren Brown are able to perform their tricks. Because, sometimes, our brains can’t bear to wait.

Stephen Macknik is a neuroscientist; he runs the Laboratory of Behavioral Neurophysiology in Phoenix, Arizona. He believes that consciousness, as we call it, is a simulation – a brilliant illusion. One day, as he was driving through Las Vegas, along the Strip, past billboards advertising various illusionists, such as Penn and Teller, Mac King and David Copperfield, he had a eureka moment. Illusionists, he realised, are, in a way, practising neuroscientists. They know, better than anyone, how our impulsive brains work. The result of this epiphany was his brilliant study of illusionists, Sleights of Mind, written with his wife, Susana Martinez-Conde, also a neuroscientist.

Speaking from Arizona, Macknik told me how easy System 1 is to fool. Take the red dress trick, as performed by the Polish-American illusionist The Great Tomsoni. The illusionist’s assistant appears on stage in a white dress.

Tomsoni tells the audience he’s going to make the dress change colour. He waves his wand. A red light is projected onto the assistant, making her dress appear red. But it’s clearly not a red dress. It’s just a white dress with a red light shining on it. The audience groans. The stage lights are dimmed, and switched on again. The assistant’s dress still looks red. Then she walks across the stage. You expect her dress to become white again. But it stays red.

This is how the trick works. When somebody flashes a red light on an object in front of your eyes, and then switches it off, your eyes “see” a red afterimage a fraction of a second after the red beam has gone. So when the stage lights are dimmed, your eyes tell you there is a field of red light in the shape of a dress in front of you. But there isn’t.

In fact, in this half-second, hidden wires pull the assistant’s white dress off her body and through a trapdoor in the stage. Of course, she’s wearing a red dress underneath. The lights come on again. You think you have haven’t been fooled. You think the apparent red dress is still a beam of red light. And then she moves. That’s when you gasp.

“Your brain,” Macknik tells me, “is a prediction machine. It’s always jumping to conclusions.” Mostly, these conclusions are correct. But sometimes they’re wrong.

Macknik has analysed countless card tricks, and cup-and-ball illusions; he’s also made a study of pickpockets. He knows how easy it is to confound System 1.

Partnoy points out that, in the fast-paced world of the 21st century, we often betray ourselves by being too impulsive. You might say that the modern world is our Derren Brown. We see this every day on Twitter; people have an impulsive thought, and tweet it, there and then. Five years ago, they might have walked to their desk, pondered a bit more, and put the thought in a blog, by which time they would have edited out the dodgy bits – the parts that were sexist, for instance, or the parts that might be open to misinterpretation. Diane Abbott, the Labour MP, fell foul of her tweeting impulses last year when she made a generalisation about white people. We could see what she meant. If she’d waited for a few hours – or even for five minutes – she might have been fine.

Then there are the instances in which just a moment’s delay would have averted a tragedy. In his book Blink, Malcolm Gladwell brilliantly analyses the seven seconds leading up to the death of a New York street peddler called Amadou Diallo. He was standing outside the door of his apartment building when he was spotted by four cops. They thought he might be a burglar. As the cops approached, Diallo put his hand in his pocket. He started to pull something out. It was black. One cop started shooting, and within moments, all four had fired. Diallo died instantly. If the first cop had waited half a second longer, he would have seen what Diallo was taking out of his pocket. It was a wallet.

As Partnoy argues, panic can turn experts into amateurs. It can make us think we have less time than we actually do. And, as Partnoy notes, our environment also alters our perception of time. As consumers, we respond more quickly to bright lighting, for example, which is the reason why shopping centres are so well lit. And research has shown people who live in a city with a population of over one million move, speak and react on average twice as quickly as those who live in a small town, so a pause seems twice as long to you if you’re the former than if you’re the latter.

Luckily, we can train our impulses. Partnoy tells us how tennis players, who have half a second to return a serve, can improve their game by teaching their impulsive side to wait until the very end of that split second before reacting; the longer they delay their return, the more information they have about the trajectory of the ball. He explains how, in 1988, the naval captain, William C. Rogers III, averted disaster when he elected not to shoot at two Iranian F-4s during the Iran-Iraq war, even though they had locked their radar onto his ship. Knowing that pilots were perfectly capable of making idle threats during military exercises, he quickly decided they weren’t really preparing to attack. He was right and the skirmish passed without incident. (Tragically, just three months later, Rogers would inadvertently cause the deaths of 290 people when, in a far more complex and high-pressure situation, he mistook a descending passenger liner for an enemy plane.)

Counter-intuitively, waiting can also be a trader’s greatest asset in the financial markets. As the economy heated up during the last decade, hundreds of traders bought into the housing market. But a few, including John Paulson, the hedge fund manager, decided to wait, reasoning that the market was bound to overheat. Paulson chose the correct moment to bet against the market. He waited and made $15?billion for his fund.

I ask Partnoy if he is a procrastinator. “I am an inveterate procrastinator,” he tells me. He’s been this way since he was a child. The theories in Wait, he says, “came from arguments with my mother about making my bed”. In a fascinating analysis, he explains that procrastination is merely another form of impulsiveness; when you put something off, you are impulsively not doing it. But, since you can only do one thing at a time, you must always be procrastinating. Life is about procrastination. The trick is to do it right.

It’s a lesson for Mel Gibson. According to Partnoy, Gibson’s impulsiveness defined, and ruined, his apology. “It was a disaster,” writes Partnoy. He apologised the next day. He was brisk and cold. It didn’t work. Partnoy says that Eliot Spitzer, the governor of New York, who was caught using prostitutes, got his apology just right.

Unlike Gibson, he waited for two full days, while the media storm raged. Then he apologised. Spitzer’s delay meant that his apology was not seen as an attempt to shut down the reaction to his bad behaviour. The public believed he meant it; it was generally agreed that he had been forgiven. All because he had waited.

Sunday Telegraph, London

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July 23, 2012 – 2:53PM
Michael Pascoe

Michael Pascoe

View more articles from Michael Pascoe

 The week ahead with Michael Pascoe

Update It’s 15 years since the Reserve Bank’s core inflation measures fell below the bank’s target range. It’s highly likely we’ll find out on Wednesday that inflation is again too low.

The June consumer price index hasn’t had the same media build up as the March figure as the RBA hasn’t signalled that this Wednesday’s announcement will have any particular bearing on its next board meeting. Three months ago, the CPI was anticipated as the final plank in the platform for RBA to cut rates. This time, the latest board minutes as good as promised monetary policy will be held steady.

It took the Asian financial crisis in 1997 to push the RBA’s trimmed mean, weighted median and the CPI-excluding-volatile-items below two per cent. This time round it’s the European financial crisis. (The American financial crisis, the GFC, didn’t get a look in as inflation has been running away from the RBA, heading towards 5 per cent, before Lehman Brothers went under – the GFC just gave us a soft landing.)

The “headline” year-to CPI dropped to 1.6 per cent in March, but the smoothed nature of the RBA’s core measures held over 2 – and that was something of an illusion, relying on the rather old June and September quarters. Annualising the most recent six months showed inflation was running at 1.8 per cent and that’s about what the annual figure will prove to be on Wednesday.

Over-utilised coverage

Public inflationary perceptions, egged on by tabloid media and self-serving politicians, remain fixated with utility bills and blind to the areas where prices have come down, even “down, down”. The forecast contribution by the carbon tax of an extra 0.7 points on the CPI will help fuel those perceptions.

The RBA has already stated it’s ignoring the carbon price impact, as it did the GST. With most people compensated for the rise, it’s of little moment to the genuine cost of living. Yet just this once, our central bank might be happy to include the carbon count.

The RBA’s job is to keep inflation within the 2 to 3 per cent range “over the cycle” so it’s hardly going to panic and dramatically slash rates on a couple of quarters’ figures, but the core inflation rate starting with a one should give RBA board meetings a different tone to what we’ve generally been used to.

For a start, it removes one defence against the chorus always calling for interest rate cuts. The strong March quarter national accounts changed some of the chorus’ rhetoric from “the RBA will cut rates” to “the RBA should cut rates”. After Wednesday, the chorus could be asking: “Why not cut rates?”

And, on the monetary doves’ side of the argument, a closer reading of the last board minutes seems to show a little more scepticism about those national accounts than most initial interpretations.

Tame inflation

Last Tuesday’s minutes were generally taken as strong indeed – inflation’s tame, the economy on the up and therefore interest rates steady unless or until something worse happens – but the RBA was also warning that the June quarter scorecard won’t be so flash.

After noting the March quarter stats, the minutes sound cautious: “However, consumer and business sentiment and other timely indicators of activity suggested that the economy was likely to record slower growth in the June quarter.”

And the RBA doesn’t seem entirely convinced the ABS was counting correctly in March: “The strength in goods consumption was somewhat at odds with a range of partial indicators and the Bank’s retail liaison over the same period, though more recent liaison had a stronger tone.”

As for housing: “… indicators suggested that the housing market remained subdued. Dwelling activity was likely to have fallen further in recent months and indicators generally suggested that activity would remain relatively weak in the near term.”

The glass is indeed half full. The statistics say we don’t need further stimulation right now and it’s nice to have plenty of ammunition at the ready while Europe remains so precarious. If low inflation persists, we should see a central banker. Setting monetary policy remains an interesting pastime.


P.S. For those who continue to believe groceries are more expensive, try this paragraph from Woolworth’s annual sales figures released this morning:

“Average prices continued to experience deflation for the second half of 4.4% (first half deflation of 3.7%) and for the fourth quarter of 4.3% when the effects of promotions and volumes are included. The higher deflation in the second half reflects the impact of produce deflation.”

According to Woolworths, the significant produce deflation – 5.7% for the year – came from the high prices caused by the previous year’s natural disasters cycling out of the equation.

By another measure, the “standard shelf price movement index” which excludes specials and promotions, prices were flat for the year. The big difference with average prices indicates just how much effort goes into those specials and promotions, which Woolworths’ suppliers tend to pay for.

Whoever’s footing the bill, it’s simply a nonsense or very poor shopping in the wrong place at the wrong time ignoring the specials, to continue to claim groceries are more expensive.

More likely, it’s a manifestation of the negative group think displayed by a large part of the nation.

Michael Pascoe is a BusinessDay contributing editor.

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by Kyle Wiens | 8:02 AM July 20, 2012

If you think an apostrophe was one of the 12 disciples of Jesus, you will never work for me. If you think a semicolon is a regular colon with an identity crisis, I will not hire you. If you scatter commas into a sentence with all the discrimination of a shotgun, you might make it to the foyer before we politely escort you from the building.

Some might call my approach to grammar extreme, but I prefer Lynne Truss’s more cuddly phraseology: I am a grammar “stickler.” And, like Truss — author of Eats, Shoots & Leaves — I have a “zero tolerance approach” to grammar mistakes that make people look stupid.

Now, Truss and I disagree on what it means to have “zero tolerance.” She thinks that people who mix up their itses “deserve to be struck by lightning, hacked up on the spot and buried in an unmarked grave,” while I just think they deserve to be passed over for a job — even if they are otherwise qualified for the position.

Everyone who applies for a position at either of my companies, iFixit or Dozuki, takes a mandatory grammar test. Extenuating circumstances aside (dyslexia, English language learners, etc.), if job hopefuls can’t distinguish between “to” and “too,” their applications go into the bin.

Of course, we write for a living. is the world’s largest online repair manual, and Dozuki helps companies write their own technical documentation, like paperless work instructions and step-by-step user manuals. So, it makes sense that we’ve made a preemptive strike against groan-worthy grammar errors.

But grammar is relevant for all companies. Yes, language is constantly changing, but that doesn’t make grammar unimportant. Good grammar is credibility, especially on the internet. In blog posts, on Facebook statuses, in e-mails, and on company websites, your words are all you have. They are a projection of you in your physical absence. And, for better or worse, people judge you if you can’t tell the difference between their, there, and they’re.

Good grammar makes good business sense — and not just when it comes to hiring writers. Writing isn’t in the official job description of most people in our office. Still, we give our grammar test to everybody, including our salespeople, our operations staff, and our programmers.

On the face of it, my zero tolerance approach to grammar errors might seem a little unfair. After all, grammar has nothing to do with job performance, or creativity, or intelligence, right?

Wrong. If it takes someone more than 20 years to notice how to properly use “it’s,” then that’s not a learning curve I’m comfortable with. So, even in this hyper-competitive market, I will pass on a great programmer who cannot write.

Grammar signifies more than just a person’s ability to remember high school English. I’ve found that people who make fewer mistakes on a grammar test also make fewer mistakes when they are doing something completely unrelated to writing — like stocking shelves or labeling parts.

In the same vein, programmers who pay attention to how they construct written language also tend to pay a lot more attention to how they code. You see, at its core, code is prose. Great programmers are more than just code monkeys; according to Stanford programming legend Donald Knuth they are “essayists who work with traditional aesthetic and literary forms.” The point: programming should be easily understood by real human beings — not just computers.

And just like good writing and good grammar, when it comes to programming, the devil’s in the details. In fact, when it comes to my whole business, details are everything.

I hire people who care about those details. Applicants who don’t think writing is important are likely to think lots of other (important) things also aren’t important. And I guarantee that even if other companies aren’t issuing grammar tests, they pay attention to sloppy mistakes on résumés. After all, sloppy is as sloppy does.

That’s why I grammar test people who walk in the door looking for a job. Grammar is my litmus test. All applicants say they’re detail-oriented; I just make my employees prove it.


Again, the legal framework is way behind the development of new technology and the implementation of that technology…

July 23, 2012

Kim Arlington

Opportunity ... Educators want more relaxed copyright rules so that students can take full advantage of the latest technology. Opportunity … educators want more relaxed copyright rules so that students can take full advantage of the latest technology. Photo: Virginia Star

SCHOOLS are paying millions of dollars to use freely available internet resources under ”draconian” copyright laws that have failed to keep pace with digital learning.

Schools spend almost $56 million a year under a compulsory licence to copy material such as books and journals without permission from the copyright owner. But an unintended consequence of the licence means schools also pay millions for internet material that the website owners never intended to charge for, according to the National Copyright Unit, which provides specialist copyright advice to the schools and TAFE sector.

While it was difficult to calculate the exact amount paid for freely available internet material, the best estimate suggested it was about $8 million, said Delia Browne, the unit’s national copyright director.

Schools also pay millions of dollars so teachers can copy classroom material from books, something individuals can do free.

”Australian schools pay copyright fees every time a teacher prints from the internet, saves a document from a website or asks a student to print a webpage for a homework assignment,” Ms Browne said.

These costs were likely to increase as the national broadband network was rolled out and might ”eventually become prohibitive”, she said.

The unit will make submissions on schools’ behalf to the Australian Law Reform Commission, which is holding an inquiry into copyright and the digital economy.

Educators want more relaxed copyright rules so that students can take full advantage of the latest technology. Many schools are also struggling to navigate the complexity of the copyright system, which was established before the rise of e-books and digital resources and demands different payments depending on the type of material and how it is used.

Uncertainty over copyright and licensing obligations forced Monte Sant’ Angelo Mercy College in North Sydney to cancel its second-hand book sales.

Every student has her own Mac computer but electronic versions of textbooks are usually available only when a new hard copy is bought.

”We were told [by publishers] that if a student purchases a book second hand, the digital licence doesn’t transfer across from the original owner,” Sue Boudakin, co-president of the school’s parents association, said.

”You can’t even pass a textbook down from one sibling to another [or] gift it to another family, so you’ve got this incredible waste of money and resources.

”It’s crazy; we’re in the midst of this digital revolution and we’ve got publishers … failing to evolve and keep up with the times.”

The director of learning and technology at Monte, Maurice Cummins, said copyright licensing was ”draconian” and was preventing teachers making the best use of interactive new media to educate students.

”Some teachers look at copyright and say, ‘It’s too hard’. If these resources are truly being used to help students learn … licensing needs to be relaxed.” Mr Cummins suggested publishers should set up “an iTunes store equivalent for textbooks – one central repository [where] schools pay a fee for basic use and then their students get automatic access to it”.

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July 21, 2012
Ross Gittins

Ross Gittins

The Sydney Morning Herald’s Economics Editor

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At last instead of jumping to conclusions and riding hobby horses we’re making good progress in analysing the causes and cures of the slowdown in our economy’s productivity improvement. There’s more to it than you may think.

Following the analysis by Saul Eslake for the Grattan Institute we’ve had a contribution from the Productivity Commission’s great productivity expert, Dean Parham, and a synthesis of the state of our knowledge by Patrick D’Arcy and Linus Gustafsson in the latest Reserve Bank Bulletin. Let me tell you what they find.

Productivity refers to the efficiency with which an economy employs resources (inputs) to produce economic output (goods and services). It matters because improvement in productivity is the key driver of growth in income per person – and hence, our material standard of living – in the long run.

The trend in productivity improvement is determined by the development of new technologies and by how efficiently resources – the ”factors” of production: land, labour and capital – are organised in the production process.

The commonest and easiest way to measure productivity is to measure the productivity of labour. You take the total quantity of goods and services produced in a period and divide it by the total number hours of labour used to produce it, thus giving output per unit of labour input.

Figures for the market economy show labour productivity improved at the annual rate of 1.8 per cent over the 20 years to 1994, then by 3.1 per cent over the 10 years to 2004, then by 1.4 per cent over the seven years to 2011.

You see there how productivity surged during the second half of the 1990s, but has since slowed to a rate of improvement ever lower than during the lacklustre ’70s and ’80s. That’s what the fuss is about.

The main way we improve the productivity of workers is to give them more machines to work with. Economists call this ”capital deepening”. Another way to think of it is that we’ve increased the ratio of (physical) capital to labour.

The part of the improvement in labour productivity that can’t be explained by capital deepening is referred to as ”multi-factor productivity” – the quantity of output produced from a given quantity of both labour and capital.

It turns out that capital deepening accounts for 1.3 percentage points of the annual improvement in labour productivity during both the 20 years to 1994 and the 10 years to 2004, and then an amazing 1.8 percentage points over the seven years to 2011.

The first conclusion from this is that the slowdown in labour productivity can’t be explained by any decline in business investment in more machines. It’s thus fully explained by a deterioration in multi-factor productivity.

Multi-factor productivity improved at an annual rate of 0.6 per cent over the 20 years to 1994, by 1.8 per cent over the 10 years to 2004 and by – get this – minus 0.4 per cent over the seven years to 2011.

Fortunately, the position isn’t as bad as that looks. The decline in multi-factor productivity is more than fully explained by the special circumstances of just two industries: mining and ”utilities” (electricity, gas and water).

Mining has seen huge investment in new production capacity that has yet to come on line. And the sky-high prices for coal and iron ore have justified the exploitation of more inaccessible deposits. Utilities have seen much investment in electricity and water infrastructure to improve the reliability of supply.

When you exclude mining and utilities you find, first, that over the past seven years capital deepening has proceeded at the same 1.3 per cent annual rate as experienced in the previous 30 years. Second, although the annual rate of multi-factor productivity improvement has slowed from 1.9 per cent over the 10 years to 2004 to plus 0.4 per cent over the latest period, that’s only a bit slower than the 0.6 per cent we experienced during the 20 years to 1994.

In other words, the main thing we have to explain is not an abysmal performance at present (after you allow for the special factors in mining and utilities) but why the unprecedented rate of improvement in multi-factor productivity during the 1990s wasn’t sustained.

The authors’ calculations confirm the recent slowdown in multi-factor productivity has occurred across virtually all market industries. So it’s a general phenomenon.

The explanation favoured by many economists is that the surge in productivity was caused by all the microeconomic reform in the 1980s and early ’90s. The subsequent fall-off, they say, is caused by the absence of further reform.

But the authors’ examine other, alternative or complementary explanations. They note that ”at a fundamental level, productivity is determined by the available technology (including the knowledge of production processes help by firms and individuals) and the way production is organised within firms and industries”.

So a possible explanation for the surge and subsequent decline in multi-factor productivity improvement, they say, is the pattern of adoption of information and communications technologies.

Then there’s the contribution to productivity from improved ”human capital” – the education, training and skills of the workforce. One indicator of education and experience is the Bureau of Statistics measure of ”quality-adjusted hours worked”.

This has been growing at a consistently faster pace than the standard measure of hours worked since the 1980s, indicating that education and experience are likely to have made positive contributions to multi-factor productivity over this period.

However, the pace of growth of this measure has slowed, suggesting a smaller contribution from improving labour quality has played some role in the productivity slowdown.

Another, possibly contributory explanation for the slowdown in productivity improvement is that, over the course of the long economic expansion between the early ’90s recession and the mild recession of 2008-09, the incentives for firms, workers and governments to implement productivity-enhancing changes gradually weakened. So broad-based economic prosperity has probably eased the pressures driving productivity improvements.

Most productivity-enhancing changes involve a degree of reorganisation than can be difficult for firms and workers. So without clear incentives for change there is unlikely to be a strong focus on enhancing productivity.

My conclusion from this thorough analysis of the problem is that we don’t have a lot to worry about. That’s because, first, when you dig into the figures you discover they’re not nearly as bad as they look.

Second, the structural change now hitting so many of our industries is just the thing to (painfully) oblige them to lift their productivity.

Twitter: @1RossGittins

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