SINGAPORE - How productivity is measured in Singapore is sensitive to economic cycles, and the final numbers can fluctuate substantially over the short term.
Therefore, said Minister of State for Trade and Industry Teo Ser Luck, it is important to look beyond short term fluctuations and press on with the productivity drive over the longer period.
Speaking in Parliament yesterday in response to queries from four MPs, Mr Teo said that Singapore's productivity Compounded Annual Growth Rate of 5.9 per cent from 2009 to 2011 was achieved over a relatively short timeframe.
This rate also included a period of high productivity growth in 2010 when the economy recovered strongly from the global economic downturn. "This year, Singapore's GDP is expected to grow by 1.5-2.5 per cent, slower than the 4.9 per cent seen last year," he said. "However, even as business activities slow, companies tend not to adjust their workforce immediately given the costs involved in hiring and firing workers. Hence, we are seeing a productivity decline, mainly reflective of the slowing economy."
Mr Teo added that it was important to continue to boost productivity at all levels. "We need to restructure our economy to move up the productivity chain. Companies need to reduce their reliance on manpower, and workers need to upgrade themselves continuously to take on higher value-added jobs," he said.
Mr Teo also gave an update on the take-up rate of the government's various productivity initiatives. He shared how some 7,000 companies have benefited in one way or another, of which 86 per cent are small and medium-sized enterprises.
To date, about $950 million has already been committed from the National Productivity Fund to support productivity initiatives.
"We will continue to keep our programmes relevant and effective for companies, as well as introduce new initiatives where required," he said.
"I urge more companies to enrol in the schemes."
In a separate but related query, Alvin Yeo (Chua Chu Kang GRC) wanted to find out about the success of the ongoing Productivity and Innovation Credit (PIC) scheme that was launched a year ago to spur productivity improvement.
Minister of State for Finance Josephine Teo said that the take-up has been promising, with 30 per cent of active companies - about 34,700 - that have filed their tax returns in Year of Assessment 2011 having claimed PIC.
Among active and small companies with an annual turnover of $10 million or less, 27 per cent have claimed PIC. Of the six categories of investment eligible for PIC claims, automation equipment was the most popular, followed by training.
"However, the effectiveness of PIC is not just about the take-up rate. Many businesses have become much more aware of the opportunities to enhance their productivity because of the efforts by trade associations and business chambers to share knowledge and best practices," said Ms Teo.