Labour productivity grows at fastest pace in seven years

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The robust global economy helped overall labour productivity here 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 from 1.8 per cent in 2016.

This was mainly 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, said the Ministry of Trade and Industry (MTI) yesterday.


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 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.

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 included food services 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.

Companies 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 there is scope to raise the productivity of domestically oriented sectors through sectoral restructuring and transformation efforts. - THE STRAITS TIMES