Labour productivity grew at fastest pace since 2010

Labour productivity expanded 4.5 per cent last year, improving significantly from 1.8 per cent in 2016.
Labour productivity expanded 4.5 per cent last year, improving significantly from 1.8 per cent in 2016. PHOTO: ST FILE

The robust global economy helped overall labour productivity in Singapore grow at its fastest pace in seven years in 2017.

Labour productivity, as measured by real value-added per actual hour worked, expanded 4.5 per cent last year, improving significantly from 1.8 per cent in 2016.

This was primarily driven by productivity gains in export-oriented sectors such as manufacturing, wholesale trade, and finance and insurance, on the back of an uptick in the global economy, according to the Ministry of Trade and Industry (MTI) yesterday.

On average, more productive sectors increased their share of the total actual hours worked at the expense of less productive sectors like construction.

An MTI analysis found that there has been a gradual shift in the drivers of gross domestic product growth from 2010 to last year, with the economy increasingly driven by productivity growth rather than employment growth.

The productivity performance in Singapore in recent years also fared well compared with several other advanced economies between 2010 and 2016.

Productivity growth of 1.7 per cent a year here was higher than that of most of the economies looked at, such as Italy at 0.1 per cent, Britain at 0.2 per cent and Germany at 1 per cent.

The MTI report also found that overall productivity growth last year was weighed down by the weaker performance in domestically oriented sectors. These sectors included food services, real estate, and administrative and support services.

Productivity in export oriented sectors surged 6.7 per cent last year, but fell 0.2 per cent in domestically oriented services.

Firms in export-oriented sectors have plenty of incentive to optimise operations and seek efficient production methods to remain competitive in the face of global competition, said the report.

MTI also indicated that there remains scope to raise the pro-ductivity of domestically oriented sectors through sectoral restructuring and transforma-tion efforts.

The report concluded that the emphasis on life-long learning and skills training under the SkillsFuture initiative will also equip workers with the necessary skills to move into more productive sectors.

Mr Loh Khum Yean, Permanent Secretary for Trade and Industry, said increasing productivity is a work in progress.

"I think it is an ongoing journey for us to take structural steps and reforms needed to improve productivity, especially for the domestic oriented sectors," he said.

"This is part of the objective of the many industry transformation maps that have been launched."

A version of this article appeared in the print edition of The Straits Times on February 15, 2018, with the headline 'Labour productivity grew at fastest pace since 2010'. Print Edition | Subscribe