Thursday, March 22, 2012

Singapore's productivity problem

Productivity, or lack of productivity, is one of the most important problems we face while working in Singapore. It is the reason we work hell a lot (1 in 5 Singapore employees work more than eleven hours daily: survey) and get exhausted. Of course, if you compare Singapore to other countries in the region, Singapore is very productive. But if you compare Singapore to the countries of the league where she thinks she is in, first world countries, it has very low productivity. In fact it looks like productivity in Singapore barely made out of third world. But this problem is not unique to Singapore, as we will see, other Asian countries we think of as "developed" are not that developed when it comes to productivity.

What is Productivity? In economic terms, productivity is defined as the value of output produced by one unit of input, but for the man on the street it is how much work a person has done in a given time. Singapore’s productivity growth has averaged just 1 per cent in the last decade. Its productivity in manufacturing is
55 to 65 per cent of that in the United States and Japan.In retail, it is 75 per cent of that in Hong Kong and just one-third that of the US. In construction, the situation is even worse. [1]

To show how productivity is creeping here, we will display 2 charts from U.S. Bureau of Labor Statistics. First one is average annual hours worked in 2010. Average annual hours worked is total number of hours worked in an economy by the number of persons employed. Of the countries covered, average annual hours worked are highest in Singapore and the Republic of Korea at well over 2,000 hours! Norway worked the fewest hours on average. In general, European countries have a lower number of average annual hours worked compared to  the non-European countries. Average annual hours are lowest in Norway and Germany. The European country with the highest level of average annual hours worked is the Czech Republic, followed by Italy.

So Asian employees work much more than the European ones and get the top spots in terms of hard work.  The picture is almost reversed when it comes to what is produced in those harded worked hours. Second chart below shows GDP per hours worked in 2010. Norway has the highest level of GDP per hours worked among the countries covered; approximately 25 per cent higher than the next highest ranked country, The United States and roughly three times the level of the Republic of Korea, last in the list.

While Singapore had the highest levels of GDP per capita, it has relatively low level of GDP per hour worked. The difference is related to Singapore having the highest average annual hours worked per employed person and the highest employment to population ratio of all countries covered!

[1] - Singapore's productivity problem

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