Chart of the Day: This graph shows the extremely wide gap between productivity and employment growth

Productivity is still negative.

Manpower curbs have led to robust job creation for locals in past quarters, but this graph from the Ministry of Trade and Industry shows just how far productivity is lagging behind employment growth.

Productivity sank into the red again in 2014. Overall labor productivity declined by 0.8% last year, a reversal of the meagre 0.3% productivity growth recorded in 2013.

Meanwhile, employment growth registered at 3.7%, lower than the 4.1% recorded in 2013.

According to Nomura, the fall in both productivity and employment growth in 2014 will likely further pressure authorities to show that the productivity drive is yielding more tangible results, which requires more fiscal spending.

“The MTI also released a study today suggesting that the contribution of capital intensity, particularly machinery and equipment capital, to aggregate labour productivity growth has declined in recent years, which hints at the need to further encourage investments on this front. In our base case, we expect a FY15 fiscal deficit of 0.3% of GDP to be announced during Budget 2015 on 23 February,” stated Nomura.