Singapore's outward-facing sectors make productivity gains while others struggled

SINGAPORE'S labour productivity rose in outward-oriented sectors in 2020, while productivity in the sectors disrupted by Covid-19 restrictions shrank, reflecting the lopsided impact wrought by the pandemic, said Minister of State for Trade and Industry Alvin Tan in Parliament on Wednesday (Nov 3).

Labour productivity, measured by real value-added per actual hour worked, grew for outward-oriented sectors such as manufacturing, wholesale trade and finance and insurance, he said.

For example, the productivity of the manufacturing sector jumped 18.6 per cent in 2020; that for the wholesale trade sector rose 3.1 per cent.

In contrast, sectors that were severely disrupted by travel and domestic restrictions, including construction, transportation and storage, accommodation and food and beverage services, experienced declines in productivity, he said.

In particular, the productivity of the transportation and storage sector slumped 22.1 per cent; that of the food and beverage services sector dropped by 17.7 per cent.

Productivity growth in 2021 is likely to follow a similar pattern, with most outward-oriented sectors set to remain positive with the pickup in global economic activity, said Tan.

Productivity in the sectors that took a heavier beating from the pandemic last year are likely to come in at below pre-Covid-19 levels this year, as they continue to be disrupted by Covid-19 restrictions.

Asked whether a new measure of productivity is needed with the spread of remote working, Tan said real value-added per actual hour worked - an indicator recognised by the International Labour Organisation and compiled by the Ministry of Trade and Industry since 2015 - is the most appropriate measure because actual hours worked capture the intensity of labour input more accurately.

He added that it accounts for the varying intensity of labour input by employees under different work arrangements.

This includes flexi-time arrangements that grant employees flexible work schedules, flexi-load arrangements that entail them working part-time or on project basis, and flexi-pace arrangements, that allow for telecommuting.

"This measure has also become more relevant in recent years with the rising number of part-time workers in the economy and then the cyclical changes in the number of hours worked by full-time workers," he said.