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Hours worked may be better productivity gauge: MTI paper
LABOUR productivity figures for the Singapore economy would be more accurate if they were computed based on actual hours worked rather than on the number of workers, a Ministry of Trade and Industry paper said on Tuesday, adding that it is working towards publishing the latter metric on a regular basis.
The alternative indicator would paint a better scenario of the ongoing productivity drive, which some analysts have criticised as having been unable to bear fruit so far.
Labour productivity fell 0.6 per cent in Q2 from the previous year on the heels of a 0.3 per cent year on year slide in Q1, according to official data out on Tuesday.
However, economists from the trade ministry said in an article published as part of its Economic Survey of Singapore report for the second quarter that the current measure for labour productivity was not the best gauge. Instead, using actual hours worked to measure productivity "better captures the actual amount of work in the economy", particularly given recent shifts in employment patterns such as the rise of part-time work, they said, adding that the actual hours worked per worker has been falling.
The economists calculated that real value-add (VA) per actual hour worked for each worker grew 0.9 per cent in 2014 from the previous year, leading to a compound annual growth rate (CAGR) of 2.9 per cent for the years 2009 through 2014. That CAGR is near the higher end of the government's 2-3 per cent target range for productivity growth over the 10 years from 2009.
In contrast, the real VA per worker - the productivity metric typically used here - fell 0.8 per cent over the same time period, leading to a slightly lower CAGR of 2.5 per cent in the same timeframe, they said in the report.
Noting that the "per worker" metric was more common mainly because employment figures were readily available, the economists said Singapore does not compile statistics on the actual hours a person works, so this data had to be estimated from other sources.
Having done that, they found that the actual hours worked per worker in the local economy rose in 2010 in tandem with a rebound from the global financial crisis but fell steadily from 2010 to 2014 across all sectors.
The biggest decline in actual hours worked over 2010 to 2014 was seen in the retail trade industry, while the smallest decline was in the construction industry. The ministry was not able to provide absolute figures by press time.