DECLINE IN LABOUR PRODUCTIVITY

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DECLINE IN LABOUR PRODUCTIVITY: 13.

Mrs Josephine Teo asked the Acting Minister for Manpower (a) what are the reasons for the decline in labour productivity as reported in the Report on Wages in Singapore 2007; (b) to what extent is this contributed by the increased presence of low-skilled and low-wage foreign workers in the workforce; and (c) whether the decline implies that efforts in skills upgrading and job redesign have been ineffective.

The Acting Minister for Manpower (Mr Gan Kim Yong): Sir, productivity tends to fluctuate from year to year. It is therefore best to assess productivity over a longer horizon, instead of drawing conclusions on the basis of a few quarters' or a single year's data. Over the past five years from 2002 to 2007, productivity growth averaged 3.0% per annum, higher than the real wage growth of 2.8% per annum. This is a respectable rate of productivity growth for a mature economy like Singapore. In developed countries like Australia, Germany, the UK and the US, average productivity growth is typically around 2.0% or below.

The decline in productivity in 2007 is partly due to the record employment growth of 234,900 jobs (9.4% growth), which was far higher than the average of 116,500 jobs created per year over the last five years. During periods of strong employment growth, productivity growth typically tends to be lower as output growth will take time to catch up with the increase in manpower. We saw this happening during the economic boom

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between 1996 and 1997, preceding the Asian financial crisis, when employment grew strongly (6.2% per annum on average) and productivity growth was low (1.8% per annum on average).

It will be simplistic to conclude that the weaker productivity performance was due to the increased presence of foreign workers. In fact, our flexible and responsive foreign manpower policies enable companies to capitalise quickly on growth opportunities in Singapore and expand to create even more jobs, including jobs for locals. This is why employment has grown strongly over the last few years.

Nevertheless, we should redouble our efforts to ensure that productivity continues to grow over the long run so that we remain competitive. Our strategy to achieve this is three-fold. Firstly, by investing in the training of our workers. Secondly, by helping companies to take advantage of the higher skills of its workers through job redesign. Thirdly, by bringing in new investments and encouraging existing companies to upgrade through technology and innovation.

The Government will continue to invest in our workers to enable them to upgrade their skills and take on better jobs, through the CET Masterplan. Companies can also benefit from a more adaptable and productive workforce.

On job redesign, we are working closely with companies to redesign jobs to enhance productivity and value. Spearheaded by NTUC, the Employment and Employability Institute (e2i) is a key driver for Job Re-creation and Industry Re-development efforts.

Finally, we support companies to upgrade their capabilities to undertake higher value-add activities and encouraging companies to invest in technology

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and innovation for greater productivity. SPRING has been helping Small and Medium Enterprises (SMEs) through its Technology Innovation Programme (TIP) to accelerate technology adaptation.

Workers and employers must work together to retrain and retool to improve our productivity and ensure our labour force remains competitive.

3.00 pm

Mr Speaker: Order. End of Question time.

[ Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 18, 22-23, 34, 36, 39-40, 42-43, 46 and 52-54 on the Order Paper are reproduced in the Appendix*. Questions Nos. 14-17, 19-21, 24-33, 35, 37-38, 41, 44-45, 47-51 and 55-56 have been postponed to the sitting of Parliament on 26th August 2008. ]

*Cols. 3099-3120.

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