Singapore's productivity further disappoints by 2% dip in 1H13

Are efforts really futile?

According to the latest labour market report, productivity growth remained negative at -2.0% yoy in H1 2013, but it may be premature to conclude that the productivity efforts are not bearing fruit. 

In fact, MOM’s view is that unemployment should remain low, though it is likely to increase as the pace of restructuring picks up, and given the time needed for productivity improvements to moderate manpower demand, employment growth for this year is likely to remain high, similar to last year.

This is despite the drop in job vacancy to unemployed persons from 1.21 in Q1 to 1.12 in Q2 2013.

The resident labor participation rate (LFPR) hit a record 66.6% in June 2013, as more older workers and housewives joined the labor force.

Given the robust labour demand in the face of foreign manpower curbs, it is plausible to see the LFPR, especially for these two population segments, pick up further in the near-term, albeit in the longer-term, there is a natural demographic constraint.

There is probably not much employers can do but to conserve labour and restructure their business operations to be more efficient and leverage on more automation or technology.