Industries Contributing to Positive Increase in Productivity
Ministry of Trade and IndustrySpeakers
Summary
This question concerns Mr Patrick Tay Teck Guan’s inquiry about the factors and sectors driving the 1% productivity growth in 2016 and the forecast for 2017. Minister for Trade and Industry (Industry) S Iswaran stated that growth was primarily driven by outward-oriented sectors, specifically Manufacturing and Accommodation, amid a pickup in external demand. Manufacturing gains were bolstered by the Electronics and Biomedical Manufacturing clusters, while the Accommodation sector benefited from a recovery in visitor arrivals. Productivity also reflected slower workforce growth and declining foreign employment in the Marine and Construction sectors. For 2017, the Minister expects labour productivity growth to strengthen further, supported by an anticipated economic expansion of 2% to 3%.
Transcript
40 Mr Patrick Tay Teck Guan asked the Minister for Trade and Industry (Industry) (a) what are the main reasons and which are the industries which contributed to the positive increase in productivity of 1% in 2016; and (b) what is the forecast for 2017, taking into consideration the productivity figures for the first half of 2017.
Mr S Iswaran: Labour productivity, as measured by real value-added (VA) per worker, grew by 1% in 2016, reversing the 0.2% decline in 2015. When measured as real VA per actual hour worked (AHW), labour productivity growth was 1.4% in 2016, compared to 1% in 2015.
At the overall level, labour productivity growth in 2016 was supported by growth in real VA on the back of a pickup in external demand, which had benefited outward-oriented sectors, such as the Manufacturing sector. At the same time, both employment and the total number of hours worked grew at a slower rate, in part due to a slowdown in local workforce growth and a decline in foreign employment (excluding foreign domestic workers), especially in the Marine and Construction sectors.
By sectors, overall productivity growth in 2016 was primarily driven by the outward-oriented sectors. Collectively, the productivity of outward-oriented sectors rose by 3.1% based on real VA per AHW or 1.8% based on real VA per worker in 2016, while that of domestically-oriented sectors declined by 1.3% based on both measures. Among the sectors, the highest productivity gains were seen in the Manufacturing (8.2% based on real VA per AHW or 7.1% based on real VA per worker) and Accommodation (5.6% in both cases) sectors.
Within the Manufacturing sector, productivity growth was led by the Electronics and Biomedical Manufacturing (BMS) clusters. The productivity of the Electronics cluster was bolstered by strong growth in the semiconductors segment on the back of a pickup in global semiconductors demand. Similarly, the productivity of the BMS cluster was supported by robust expansions in both the pharmaceuticals and medical technology segments due to strong external demand. On its part, the Accommodation sector benefited from a recovery in visitor arrivals, with gross lettings at gazetted hotels rising by 6% in tandem with a 7.7% increase in visitor arrivals.
For 2017, the Ministry of Trade and Industry expects the Singapore economy to grow by 2% to 3%, with growth likely to come in at around 2.5% on the back of a continued recovery in external demand. This is higher than the 2% growth achieved in 2016. Consequently, labour productivity growth in 2017 is also expected to come in stronger than last year's.