Friday, February 10, 2017

Zero productivity growth for 5 years

Here is a comment about the growth target set in the Committee for the Future Economy (CFE) report:

UOB’s senior economist, Alvin Liew, noted that the target of 2 to 3 per cent growth is a “significant markdown” from the 3 to 5 per cent target set previously in the ESC.

“In the past, the 3 to 5 per cent was to be supported by 1 to 2 per cent labour supply growth and 2 to 3 per cent labour productivity growth. Although we managed the former, our labour productivity grew an average of zero per cent since the 2011 General Election.

"The CFE's GDP target thus lowers public expectations and implies 1 per cent labour supply growth with a 1 to 2 per cent labour productivity growth, which is much more manageable,” he said.

Question: Why did our productivity growth averaged 0% for the past five years? Is it due mainly to the influx of low wage workers from other countries? Does it reflect that our business processes are inefficient, leading to unproductive work?

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