Labour-intensive sectors which have not raised their game are a big reason the productivity drive has struggled to gain momentum in the past two years, labour chief Lim Swee Say said yesterday.
Sectors such as construction and food services are not only lagging behind in productivity levels but are also increasing their share of the total workforce.
These two factors have combined to pull down overall productivity growth, which has been weak over the past few years, said Mr Lim, who is secretary-general of the National Trades Union Congress (NTUC).
"If the demand for manpower, both local and foreign, in these less productive sectors continues to outpace that of more productive sectors, it will not serve the interests of our workers, and will continue to impede our effort to improve national productivity."
Speaking to unionists ata National Day observance ceremony yesterday, Mr Lim noted that productivity grew by an average of 3 per cent a year over the past four years. But of those four years, productivity actually fell in 2012 and last year.
Mr Lim, who is also Minister in the Prime Minister's Office, said that to tackle this problem, the country has to take a three- pronged approach.
First, every sector has to be made more productive. This can be done by getting firms to emulate more successful ones in the productivity drive and speeding up the pace of innovation and change across industries, he said.
Second, helping less productive sectors lower their need for workers. "As we slow down the growth of the workforce to a more sustainable pace, we need to help sectors with lower productivity make better use of technology, especially labour-saving devices," he said.
Lastly, the country must go on "the offensive" by thinking of the future, said Mr Lim at the NTUC Centre. In the manufacturing sector, for example, there are firms that have begun to use robots and to train workers to work with them, which allows the workers to earn higher salaries, he said.
The service sector, he added, can start to encourage more cooperation between customers and employees to raise the overall service experience in innovative ways that use less labour.
He also told the media that the labour movement fully supports the recommendations of the Applied Study in Polytechnics and ITE Review committee.
"The key driving force in terms of how far we can go, how fast we can move, depends on the quality of manpower," he said.
But while some economists agreed that the labour-intensive sectors may have dragged down overall productivity, others also questioned if firms in those sectors can raise output faster than labour growth.
Bank of America Merrill Lynch economist Chua Hak Bin said the food and beverage and building sectors, which have seen some of the strongest tightening of foreign labour, are the ones failing to see productivity improvements.
"It calls to question whether they're already at their limits, or whether the workers... who are being brought into the labour force are not able to be as productive as the foreign workers they are replacing," he said.
OCBC Bank economist Selena Ling said that even with manpower curbs restricting the growth of the workforce, it remains to be seen whether companies can raise output faster than labour growth.
"It's not clear how much (of productivity growth) is policy-driven and how much is due to companies' decisions about whether to hire more or invest more."
