Feb 23, 2013

Singapore - Singapore's labour productivity drops 2.6% in 2012

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SINGAPORE: Labour productivity fell by 2.6 per cent in 2012, a reversal from the growth of 1.3 per cent the previous year.

The Economic Survey of Singapore 2012, released by the Ministry of Trade and Industry (MTI) on Friday, also showed an increase in total employment.

Singapore's productivity drive has yet to show results. Labour productivity has been falling continuously.

In the fourth quarter of last year, productivity fell by 2.5 per cent, the fifth consecutive quarter of decline.

The drop was broad-based, with manufacturing, construction and services sectors all experiencing negative growth.

The information and communications sector was the only industry to record positive productivity growth.

MTI attributed the declines in productivity numbers to the country's slower economic growth over the past two years.

The government takes a sectoral approach in trying to raise productivity. It has identified 16 priority sectors -- that include construction, retail, F&B and even accountancy -- to drive up productivity. These sectors have been selected based on their potential for productivity enhancements.

Permanent Secretary for Trade and Industry Ow Foong Pheng said: "There are different issues for each sectors. Some are because gestation period takes a long lead time as in construction, others because we need to enhance accessibility of schemes or encourage better uptake of initiatives that agencies are trying to roll out.

"We think that as some of the policy changes on the resource side kick in, we will actually see companies really taking up the initiatives."

Analysts suggest looking at the productivity needs of individual companies. They said even though it may be administratively difficult, there are benefits.

Associate Professor Randolph Tan, SIM University's head of Business Programme, said: "Being able to look at individual company's needs and perhaps helping them prepare for an environment where there may be lower supply for a certain type of worker, will help to secure the productivity gains that they are making and they can continue to make for the future.

"It'll keep them competitive. It'll also ensure they continue to contribute to the growth in the coming years."

Schemes like the Productivity and Innovation Credit have been introduced to help companies improve productivity.

Some economists are still optimistic that time is needed for such schemes to gain traction.

Assoc Prof Tan said: "What we've seen over the last three years since the introduction of the Productivity and Innovation Credit is that the labour market in a state of flux. There's been continuous inflow of large foreign manpower.

"So I think it will take some time for the economy to stabilise, for companies to stabilise their operations before we can see what the actual productivity situation is."

MTI's survey also showed nominal wages -- defined as wages not yet adjusted for inflation -- rose by 2.3 per cent. However, this was the lowest growth in three years.

On a more positive note, total employment increased by some 129,600 last year.

Unemployment remained unchanged at 2 per cent, and the Manpower Ministry said the labour market would continue to remain tight this year.

Meanwhile, the Monetary Authority of Singapore says its inflation forecasts for 2013 remain unchanged.

Headline inflation is expected to come in at 3.5 to 4.5 percent, while the core inflation - which excludes private road transport and housing costs - will be at 2 to 3 percent this year.

Edward Robinson, Assistant Managing Director, Monetary Authority of Singapore, says: "In the next few months you could get some degree of volatility in part due to COE prices impinging on the headline numbers; for core inflation, if there is a stronger pickup in the global economy and that leads to firmer prices in commodities, then I think you could get some feed through back to food prices here."

- CNA/al/ch

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