For the first time in at least 10 years, Singapore’s labour productivity declined in 2019. According to economists, the country’s restructuring drive and productivity yet needs to be seen if they remain on track.
Beginning in 2010, the first negative reading for real value-added per actual hour worked was recorded as it dropped by 1.5 per cent.
If measured as real value-added per worker, then the figure declined by 0.8 per cent. It was during the global financial crisis of 2009 that the last time this reading was negative.
According to the Ministry of Manpower (MOM), the drop was also reflected in the strong employment alongside the slowdown in economic growth.
The economic growth in 2019 was the lowest since 2009. On Thursday (12 March), MOM released the labour productivity figures in its Statement on Labour Market Developments 2019.
Although there was improvement in the construction sector in 2019, the productivity drop in manufacturing and services sectors have overshadowed that improvement.
The overall decline was possibly caused by cyclical sources because Singapore is very much an open economy, economists stated.
With the current labour market right, companies are not looking to hire and fire frequently, according to Selena Ling, Chief Economist at OCBC Bank.
She added that the reason for productivity swings from year-to-year would be economic growth, while structural issues could also be causing further declines in productivity.
Chua Hak Bin, Senior Economist at Maybank Kim Eng, opined that in spite of the newest data, “we cannot conclude that the Government’s productivity drive has been successful or a failure over the past decade”.
Irvin Seah, Senior Economist at DBS Bank, argued, “Median income growth is a better indicator of whether we are making progress in restructuring, since at the end of the day that’s the target – having income growth for Singaporeans.”