How much more productive have Singaporeans really become?

ONE nugget in the 2017 report card of the Singapore economy is the finding that labour productivity jumped to a seven-year high last year, confirming earlier trend projections.

According to the data released last week, Singapore's labour productivity - as measured by real value added per actual hour worked - grew 4.5 per cent in 2017. This is a marked uptick from 2016's 1.8 per cent, and the highest since the economic rebound from the global financial crisis in 2010. All this raises some interesting questions. For one thing, is productivity a cause or effect? It would be noted that Singapore's productivity gains have come largely in tandem with a pick-up in global economic activity and trade. And much of it has been achieved in the external-orientated sectors. On the flip side, sectors such as construction achieved lower productivity amid a slump in the industry. So to what extent is Singapore's productivity demand-driven?

One can also argue that the gains of recent years have also come on the back of the government's decision to slow down foreign worker inflows. Indeed, the figures show that the foreign workforce numbers have either dipped slightly or flattened out over the past three years. The Ministry of Trade and Industry's own analysis showed that higher output had been achieved despite a fall in employment growth, which one can reasonably assume translates into fewer man-hours. Then there is also the question about the role of technology. How do we measure the improved efficiency and output gains achieved by optimal man-machine interaction?