3 Composition of total supply and value added[6]
The inter industry transactions matrix provides information on the supply and use of products by industries. Data are available on total supply at basic prices for the eight countries, Australia, Belgium, Denmark, Finland, Germany, New Zealand, Norway and the United Kingdom. The composition of total supply is plotted in Figure 1.
The share of intermediary output in total supply is largest for New Zealand at 45.5 percent, which is higher than in the United Kingdom (42.8 percent), Australia (42.4 percent) and Germany (42.1 percent). The share of intermediary output in total supply is lowest in Denmark, at 33.7 percent.
In all countries, the largest category of final demand is consumption, contributing between 25.7 percent (Belgium) and 37.7 percent (Australia) to total supply. The second largest category is exports. Australia, at 10.3 percent, has the lowest share of exports as a percent of total supply. In Belgium, the share of exports, at 25.5 percent, is only marginally lower than that of consumption (25.7 percent). Exports as a proportion of total supply are also high in Norway (20.4 percent), Finland (18.8 percent) and Denmark (18.5 percent). The share in New Zealand (14.1 percent) is comparable to that in the United Kingdom (14.4 percent).
Gross fixed capital formation as a percent of total supply varies between 6.1 percent (United Kingdom) and 11.7 percent (Denmark). In New Zealand, gross fixed capital formation make up 7.8 percent of industries’ total supply. Inventories contribute positively to total supply in Norway (0.7 percent), New Zealand (0.6 percent), Finland (0.5 percent) and the United Kingdom (0.3 percent) and negatively in Australia (-0.3 percent).
Figure 2 plots the composition of value added. The two largest components of value added are (i) compensation of employees, and (ii) gross operating surplus and mixed income.[7] The share of compensation of employees in value added is high in Germany (61.2 percent), the United Kingdom (60.4 percent) and Denmark (59.6 percent) and lowest in Norway (43.8 percent), Finland (44.8 percent) and New Zealand (46.9 percent). Adding employers’ social contributions, which are reported separately in Finland and Norway, brings the labour component of value added in Finland and Norway into line with those in other countries.
The share of gross operating surplus and mixed income in value added, at 50 percent, is highest in New Zealand, followed by Norway (48.4 percent) and Finland (44.8 percent).
The composition of value added differs across countries because of differences in industrial structure, relative prices, the adoption of labour saving technology or more productive capital. In comparison to other OECD countries, the return to labour in New Zealand, as measured by compensation of employees, is low, while the return to capital, measured by gross operating surplus and mixed income is high. In part, this difference arises because for some industries, like agriculture, which is relatively more important in New Zealand, compensation of employees is small with most returns occurring in the form of operating surplus.
The share of compensation of employees fell in New Zealand in the mid-1980s, partly as a result of an increase in the number of self-employed following the downsizing of publicly owned companies and public sector organisations (Claus, 2003). As noted earlier, Statistics New Zealand allocates the renumeration of working proprietors in small family companies to profit distribution rather than wages and salaries. Adjusting for the number of self-employed raises the share of compensation of employees and lowers the proportion of gross operating surplus and mixed income, but still leaves compensation of employees lower than in other countries.
Other taxes less subsidies contribute positively to value added in Australia (4 percent), New Zealand (3.1 percent), the United Kingdom (2.2 percent) and Belgium (1.4 percent). The contribution is negative in Finland (-2.3 percent), Norway (-0.6 percent) and Denmark (-0.2 percent) as subsidies on production exceed other taxes. A look at the dis-aggregated data that underly Figure 2 shows that the agriculture, hunting and fishing industry is the main recipient of subsidies on production in Finland and Norway.
