JOB TURNOVER WITH INCOMPLETE INFORMATION

Abstract

In April 1988, the Task Force on Job-Hopping was formed by the National Productivity Council to address the problem of labour turnover, which by 1987, had registered a high value of 23.3 per cent across the whole economy. The major theme of this academic exercise is to investigate the reason why certain groups of workers are more likely to turnover than the rest of the economy's workforce. Data suggest that the Manufacturing sector, the production workers, those who are working in firms whose employment size falls in the range of 100 to 199, employees who are between 15 and 19 years old and those whose highest educational level attained is post primary or below/VITB exhibit a higher turnover rate than the rest of the employees in the economy. Attempts have been made to probe the causes of these phenomena. Major findings suggest that these are a result of asymmetric information existing in the labour market. Employers do not know the actual productivity and ability of a job applicant. What they can do is to observe certain "signals" displayed by workers and these signals will be used to gauge one's productivity level. The perceived productivities will determine the wage one is to receive and thus the likelihood of quitting as wage has been quoted as the most important factor in the job switching decision.