LABOUR PRODUCTIVITY DETERMINATION : A CASE STUDY OF SINGAPORE

Abstract

Productivity has a vital role to play in gaining competitive advantage, accelerating economic development and enriching the quality of life. This paper tries to present the complex nature of productivity concept with its numerous interpretations and measurements. Attempts are also being made to present a more wholesome picture of the importance of productivity at all levels. An overview of the productivity process in Singapore, its strategies and achievements over the years will be presented. Figures and tables showing Singapore's productivity performance over the years at the national and sectoral levels will also be shown. This is to shed light on the progress of productivity improvements over the years. An empirical analysis is also done, in the case of Singapore, on the economy as a whole and separately on the manufacturing and transport and communications sectors. l will explore three factors that may determine labour productivity. They are wages, union density and skills training. The findings reveal that wages have a positive and significant impact on productivity. As such, productivity level is high when wages are high and vice versa. There is a positive correlation between union density and productivity. Training grants committed in this study is used as a proxy to measure the intensification of skills training and its impact on productivity. Results reveal that the amount of training grants committed is not significant for both levels of analysis, although it has a positive impact on productivity in the transport and communications sector. The role of the government, unions and employers m maintaining an acceptable wage compensating system, harmonious industrial relations and skills upgrading through training and retraining that lead to productivity increase, will remain important in determining productivity. The human element persists to play an invaluable role in determining productivity in this age of competitiveness; which ultimately will be a major source of Singapore's increased competitive edge, sustainable long-term growth, and a quality of life for everyone. Higher productivity will continue to be the goal accompanying Singapore into the next millennium.