Key factors could be dragging on Australia's productivity: e61 thinktank

The deterioration in the nation's productivity in the past decade has coincided with a decline in the frequency with which people change employment, the e61 thinktank said.

In each year of the past decade, less than one in 10 workers have changed their job, well below the rate during the 1980s and early 1990s when the average was in excess of 15 per cent.

Over the same period, average productivity growth has slowed from more than 2 per cent to just 1.2 per cent for most of the past decade.

Analysis by e61 researcher Jack Buckley argues the slowdown in job switching could be contributing to the nation's lacklustre productivity gains.

Mr Buckley found that workers who change jobs move to a firm that is, on average, 13.1 per cent more productive than the one they left.

The difference is even more pronounced among younger workers aged 25 to 34 years, who move to a firm that is 14.6 per cent more productive.

Older workers also tend to move to more productive firms, but the difference is smaller at around 9.3 per cent.

Mr Buckley said a likely explanation for the difference is that younger staff are more likely to be switching jobs in order to find one that better matches with their skills.

Of course, some workers on the move land at firms that are less productive.

The e61 researcher said of those who switched to a less productive firm, more than one in five did so because they were changing occupations, potentially as part of a career change. One in ten were moving to a young firm (in existence for less than five years) that was increasing in size and had significant growth potential. And almost 3 per cent made the move as part of a shift from the city to a regional area, possibly because of living cost and lifestyle reasons.

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Assistant Minister for Competition Andrew Leigh has voiced concerns about the slowdown in worker mobility in recent years and has identified non-compete clauses in employment contracts as one of the potential causes.

Recent research indicates that more than one in five workers are bound by a non-compete clause, including many in low-wage occupations.

Dr Leigh has directed the Australian Competition and Consumer Commission and Treasury to report on the competitive impacts of these clauses, arguing that they may stifle wage growth by making it harder for workers to switch jobs and could be helping put a handbrake on productivity by making it more difficult for start-ups to hire the staff they need.

Mr Buckley said that, in addition to abolishing non-compete clauses, other barriers to tackle to boost worker mobility include getting qualifications recognised between jurisdictions and replacing stamp duty with a land tax.