TASMANIANS work significantly less days than their interstate counterparts and even when they are employed they are less productive, says senior economist Saul Eslake.
It's not that Tasmanians are lazier than interstate workers - they don't have the skill levels because they leave school on average much earlier than young people interstate.
Mr Eslake told more than 120 people at a Launceston Chamber of Commerce lunch yesterday that one of the essentials to lifting the state out of the financial doldrums was the upskilling of its young people and its workforce.
``Tasmanians stay in school for less time than their mainland counterparts and if they leave school they are less likely to gain post secondary qualifications and as a result a smaller proportion of the Tasmanian workforce has the kind of skills that employers need and expect in order to provide high-paying jobs,'' Mr Eslake said.
The message from his annual state of the state address for the chamber had particular resonance the week after Tasmania's unemployment figures sky-rocketed for the second month in a row.
Last week's figures revealed that Tasmania's unemployment was running at 8.4 per cent of the work age population compared with a national average of 5.7 per cent.
Mr Eslake's economic analysis also followed the state's biggest job summit for many years organised by the Tasmanian Chamber of Commerce in Launceston last week.
Mr Eslake is an economist with bank of America Merrill Lynch and deputy chairman of the federal government's National Housing Supply Council.
He plans to return to the state to live with his wife and two small children early next year after more than 25 years.
He graduated from the University of Tasmania with a first class degree in economics.
Mr Eslake said employed Tasmanians worked an average of 9 1/2 fewer hours a month than employed people interstate.
For each hour that they work, Tasmanian workers produce about $10.50 or nearly 14 per cent less of goods and service than mainland workers, Mr Eslake said.
The productivity gap can be partly attributed to a below-average proportion of Tasmanians employed in high productivity sectors such as mining and financial services.
But it's also because Tasmanian productivity levels are down in many industries from construction, retailing and information and telecommunications services to rental hire and real estate and public administration because of lower levels of education, Mr Eslake said.
The size of the productivity gap between Tasmanian and interstate workers means that there is no cost advantage for business and industry to invest in the state because of lower wages costs, he said.
Tasmania's high government spending in a handful of areas including health and education is also holding back the state's economy, Mr Eslake said.
``Above [national] average spending is concentrated in a relatively small number of areas [in Tasmania] particularly schools and acute care hospitals,'' he said.
``All of this additional spending would be justified if Tasmanians were getting, or thought that they were getting, better than average quality of service.
``That's a perfectly legitimate choice to make - it's the choice that Swedes and Norwegians make every time they go to the polling booth.
``Here in Tasmania by contrast we pay below average state taxes, have above average spending on public services but it's very hard to find convincing evidence that we get an above average quality range of services for the money that we spend.''