Labour Productivity in the New Zealand Construction Industry: A Thorough Investigation

Van Dai Tran
John E Tookey


Productivity growth is strongly correlated to economic growth and increases in welfare. This fact also holds true at the industry level and is particularly true in the NZ construction industry, since productivity growth in this sector may have significant effects on the affordability of housing in the country. In recent years construction in NZ has been subjected to a series of reports that have either highlighted ‘failure’ to grow productivity or have exhorted the industry to improve its ‘poor performance’.  However thus far little by way of analysis has gone into the productivity figures that have been quoted, nor has much been done to explain and justify if or why these figures are correct or incorrect.

This research seeks to deconstruct construction productivity figures in NZ and explain the patterns over recent years of ‘poor performance’ in comparison with other industries.  As such it will examine the nature of the NZ construction industry and analyse the historic statistics related to its labour productivity. This will provide an overall understanding of the sector as well as those extraneous factors that may have significant influences on the NZ construction sector.

The research found that while factors influencing inputs of labour productivity measure such as labour and material costs remained stable, factors impacting the corresponding outputs such as house and land prices, value of work in Non-residential and Infrastructure construction grew significantly between 1997 and 2007. Given the positive skewing effect of standard economic indicators (inflation etc) on construction labour productivity figures, the relatively poor performance of construction is worrying for the industry. The paper concludes by demonstrating labour productivity in construction is significantly worse performing than previously suspected.

Full Text:



Allan. N, Yin. Y, Scheepbouwer. E (2008) A study into the Cyclical Performance of the New Zealand Construction Industry, New Zealand Centre for Advanced Engineering, Christchurch, New Zealand"

APMF Study Guide (2010) Quantitative Research Techniques, Marketing Research"

Barr. P.S (2004) Research Methodology in Strategy and Management, Volume 1, Elsevier Ltd, Emerald Group Publishing Limited"

Black. M, Guy. M, McLellan. N (2003) Productivity in New Zealand 1998 to 2002, New Zealand Treasury, Wellington 6008, New Zealand"

Burney. A. (2008) Inductive and Deductive Research Approach, Department of Computer Science, University of Karachi"

Christou. E. Et al (2007) Research Methodology in Hospitality Industry: The role of the Inquiry Paradigms, University of The Aegean, Mihalon 8, 82100, Chios, Greece"

Country Health Information Profiles (2010) New Zealand, World Health Organisation,"

Cumming. G (2002) Caught in a ripple effect from Sep 11, The New Zealand Herald, NZ"

Davis. N (2007), Construction Sector Productivity-Scoping Report, Martin-Jenkins, Wellington, New Zealand"

De Vaus, D (2005) Research design in Social Research, New York University, New York, USA"

Del Siegle (2010) Qualitative Research Design, University of Connecticut, Connecticut, USA"

Department of Housing and Building (2009), Report of the Building and Construction Sector Productivity Taskforce-A modern efficiency and productive New Zealand built infrastructure industry, Department of Housing and Building, Wellington, New Zealand"

Department of Labour (2008) Construction Sector Outlook, Department of Labour, New Zealand Government, Wellington"

Department of Labour (2009) Skills in the Labour Market Outlook, Department of Labour, New Zealand Government, Wellington"

Department of Labour (2009) Labour Market Outlook, Department of Labour, New Zealand Government, Wellington"

Department of Labour (2005) Construction Industry-Workforce Trends, Department of Labour, New Zealand Government, Wellington"

Drew. A (2007) New Zealands productivity performance and prospect", Reserve Bank of New Zealand, Wellington, New Zealand"

Fallow. B (2008) Omen of recession seen in economy, The New Zealand Herald, NZ"

Grimes. A & Aitken. A (2006) Regional Housing Markets in New Zealand: House Price, Sales and Supply Responses, Motu Economic and Public Policy Research, Wellington, NZ"

Gruber. T. (1993) A Translation Approach to Portable Ontology Specifications, Knowledge Systems Laboratory, Computer Science Department, Stanford University, CA"

Holzer. M, Nagel. S.S. (1985) Productivity and Public Policy, Sage Publications, Beverly Hills, California, USA"

Hopkins. W. G. (2000) Quantitative Research Design, Department of Physiology, University of Otago, Dunedin 9001, New Zealand"

Infometrics (2008) Employment profile and future demand for Crane Operators in New Zealand, Infometrics Ltd, New Zealand"

Janssen. J, McLoughlin. S (2008) New Zealands Productivity Performance", New Zealand Treasury, Wellington 6015, New Zealand"

Mare. D, Hyslop. D (2008) Cyclical Earnings Variation and the Composition of Employment, Statistics New Zealand, Wellington, New Zealand"

Merry. A, Spearpoint. M (2008) The Building Act 2004 and the New Zealand Fire Service, New Zealand Fire Service, Christchurch, New Zealand"

Ministry of Agriculture and Forestry (2001) New Zealand Statistics, MAF, Wellington, New Zealand, link:"

New Zealand Treasury (2010) Overview of New Zealand economy, New Zealand Treasury, Wellington, New Zealand, link:"

NZPA (2002) Economic stability has labour market buzzing, The New Zealand Herald, NZ"

Oram. R (1999) House prices take 7pc hit, The New Zealand Herald, New Zealand"

Organisation for Economic Co-operation and Development (2002) Measuring Productivity-OECD Manual, OECD"

Organisation for Economic Co-operation and Development (2007) Economic Survey of New Zealand, OECD"

Rajasekar. S. et al (2006) Research Methodology, School of Physics, Bharathidasan University, Tiruchirapalli 620024, Tamilnadu, India"

Rankin. K (1995) New Zealand 1995: a Miracle Economy?, Department of Economics, the University of Auckland, Auckland, New Zealand"

Rawnsley. M (1998) Ontology, Epistemology, and Methodology: A Clarification, Nursing Science Quarterly, Sage Publications"

Rider, Levett, Bucknall (March 2010) New Zealand Trends in Property and Construction, New Zealand"

Saravanaperumal. M (2008) Labour Market Adjustment in the Construction Industry 2001-2006, Statistics New Zealand, Wellington, New Zealand"

Selkirk. D (2010) The Building Act 2004: Major Implications for Property Developers, Builders and Vendors, Fortune Manning Lawyers, Auckland, New Zealand"

Statistics New Zealand (2009) A Statistical Overview of the Construction Industry from 2000 to 2008, Statistics New Zealand, Christchurch, New Zealand"

Trochim. W.M.K. (2006) Research Methods Knowledge Base, Atomic Dog Publication, Cincinnati, Ohio, USA"

University of Alabama in Huntsville (2010) Types of Research Designs, University of Alabama in Huntsville, USA"



Share this article: