Han Fook Kwang, Editor At Large

Understanding productivity: Why we haven't got it still

My neighbour's house is being rebuilt and I'm having a close-up view of productivity in the construction industry.

It isn't a pretty picture.

There are wooden planks, steel pipes, scaffoldings, assorted tools and debris all over the place where a new three-storey house will soon stand.

At any one time there are at least half a dozen workers, South Asians and Chinese mainlanders, up and down the half-finished building.

They come every morning in an open lorry looking more like casual labourers picked off the streets than skilled artisans.

One look at the state of the site is enough to tell anyone there's still a mountain to climb in the national effort to boost productivity and restructure the industry.

In overall productivity terms, the industry is a laggard, way behind other countries including Japan, Australia and the United States.

To be fair, it isn't the complete picture.

In bigger projects, such as multi-storey commercial buildings and public housing flats, new technology and advanced building techniques are being introduced.

The Building and Construction Authority has been pushing the industry to upgrade its methods and rely less on cheap labour.

It has incentive schemes, for example, to encourage developers to use pre-fabricated units such as bathrooms, which are manufactured in factories and installed at the site with interiors fully finished.

BCA's initiatives have a reasonable chance of succeeding provided the effort is sustained and there isn't a U-turn to relax the foreign worker inflow as has happened many times in the past.

This will take much political will and some pain to see through.

The push to raise productivity began in earnest four years ago when a target growth of 2 to 3 per cent a year was set.

But the economy has struggled since to make even a tenth of that.

A big part of the issue is coming to grips with the subject itself.

Productivity as a concept might seem simple - getting workers to produce more - but in reality it's as complex as life itself.

As the economy becomes more sophisticated, it's not so straightforward a matter of getting more from each worker.

You have to start asking some really hard questions such as whether the worker is doing the right job at all.

Or should he or she be doing something else which the world values more and is willing to pay a higher price for.

What exactly should Singaporean workers be doing that takes advantage of their skills and experience?

If they are in the wrong job, one which they won't ever excel in, it could end up being a frustrating and futile effort for everyone.

I was therefore glad to read a statement from the Monetary Authority of Singapore (MAS) earlier this month, making a similar point when it responded to a question on why Singapore wasn't able to meet its productivity targets.

In effect it said, don't get too hung up over productivity because that's not the ultimate objective.

It was an extraordinary comment for MAS to make, somewhat out of sync with recent pronouncements by government leaders, but entirely correct, in my view, and worth quoting in detail:

"Restructuring is about making the shifts necessary to align the structure of the economy with our capabilities and endowments, in other words, to produce what we are good at and have the resources for.

"The ultimate objective of raising productivity is to increase real wages for Singaporeans, which in turn is a means to increase economic welfare through consumption of a variety of goods and services. Hence, productivity is not an end in itself, neither is production, exports or competitiveness per se."

There's a mighty lot of ideas and questions in those few lines, enough to fill an entire construction site.

Someone should really dig into it and explain what it means to Singaporeans because it's about all the things that matter greatly: jobs, wages, living standards and economic security.

What is Singapore really good at producing? It's a subject worthy of an entire National Day Rally.

Without this discussion about the Singapore economy and its larger purpose, the debate over productivity will be one-dimensional and unsatisfying.

The other unsatisfactory bit about the productivity discussion so far is that it has been focused almost completely on technology and machines, and skills and education.

These are, of course, hugely important areas that Singapore has to get right.

But productivity is also about the human relationship that exists in society, and especially at the company or organisational level.

It is about how management treats workers, and, in turn, how workers respond to their common challenge.

If workers do not believe that bosses are fair, that the company belongs to them as much as shareholders, and that they have a future in it, no amount of skill or technology will help them excel.

But how to develop such a culture?

Here's a tip from the Japanese Productivity Centre, which has guided the country's industrialisation drive.

"From its inception, JPC never considered the productivity concept to encompass economic efficiency alone. Our concept of productivity was always harmoniously integrated with human aspects and respect for human beings."

It's written in Japanese English, but the idea is both deep and crystal clear.

And what follows from this?

According to the JPC, it is "fair distribution of the fruits of productivity".

Now, we're getting close to the bone of the issue, to do with how the rewards of growth are distributed, which the Japanese consider critical to having a productive workforce but which is hardly discussed here.

It explains why their society is much more egalitarian than, say, the US or Singapore.

But, you might ask, what is fair?

When the human relationship in an organisation is right, and everyone feels they belong and are looking after each other's interest, you will know what is fair, and what isn't.

If it isn't right, no amount of debating or negotiating will produce a satisfactory answer.

Singapore should spend some effort understanding this concept.

It would be a most productive time.

hanfk@sph.com.sg