Low levels of worker productivity are restraining our living standards and well-being, according to the OECD.

While economic growth remains strong, low levels of labour productivity and the challenge of adapting to a changing job market are holding us back, the international agency concludes in its Economic Survey of New Zealand 2017.

The report highlights weakness in maths skills and the fact that many New Zealander's are over-qualified for the jobs they end up doing as two key reasons why we are struggling to adapt to the modern job market.

The OECD notes that employment has shifted towards high-skilled occupations, a trend that is likely to continue with further uptake of digital technologies, including Artificial Intelligence.

New Zealand has high levels of skills in areas like literacy and IT use but also suffers from high levels of mismatch between qualifications, skills and jobs.

A larger than average proportion of New Zealand workers hold high level qualifications for jobs in which the labour market is oversupplied so then end up settling for jobs which requre lower qualifications outside their chosen field, the report says.

Improving educational achievement in mathematics would provide more young people with good job prospects in fields such as engineering and computing, it says.

With more workers likely to be displaced over the next 10-20 years, there may be a need to strengthen New Zealand's limited arrangements for supporting displaced workers.

New Zealand's low levels of productivity have long been identified as a weak spot for the economy.

The report notes that we remain well below other leading OECD countries and points to a range of factors for the problem.

These include a lack of international connections, the small scale of industries limiting their ability to cluster and work together, weak competitive pressures; low rates of capital investment; and "meagre" research and development activity.

The gap between labour productivity levels here and in Australia was largely caused by lower levels in the construction and financial services.

The report also highlighted some key risks to New Zealand's financial stability. These were broadly in line with those indetified by the Reserve Bank - including high levels of household debt, rising house prices.

The report recommends that the Reserve Bank is given the power to impose Debt to Income Ratio restrictions on bank lending.

Last week the bank published a consulataion document on DTIs but will still require approval by the Government.

The OECD Economic and Development Review Committee last produced a report on New Zealand in 2015.

-NZ Herald