Productivity growth as a barrier to a sustainability transition

The need for strong productivity growth is a prominent feature of economic policy debates in Australia. Using the productivity trap concept, this viewpoint explores how in some circumstances the pursuit of productivity growth is a barrier to effective sustainability transitions. This is illustrated by a case study of the Australian baking industry, where the increased market share of small-scale artisan bakers vis-à-vis industrial bakers has recently led to an overall decline in productivity across the baking sector. Although artisan bakers produce more nutritious products and have the potential to significantly increase the energy efficiency of their operations, their labour productivity is half that of their industrial counterparts. Whilst this is good for employment, public health and the environment, artisan bakers have been denigrated as a ‘drain on productivity’. This case study illustrates the potential role of low-productivity goods and services in a sustainability transition in Australia and other developed countries.