Productivity growth down but still ahead of most

SINGAPORE - Singapore's manufacturing labour productivity growth slowed sharply last year, but the gains were still ahead of those in other developed economies, says the United States Department of Labor.

But Singapore's competitiveness was severely blunted by a sharp rise in its unit labour cost (ULC) in US dollar terms, boosted by a stronger Singapore currency, according to the Labor Department in its latest international comparisons of manufacturing productivity and unit labour cost trends.

Only the Czech Republic and Singapore experienced productivity (output per hour) growth of 8 per cent or higher in 2011, while in 2010 the majority of countries experienced growth that exceeded 8 per cent, it said.

While Singapore's productivity gains plunged last year, it came after a big jump of 35 per cent in 2010, the largest increase among the 19 economies tracked by the department's Bureau of Labor Statistics.

The next biggest increase trailed far behind at 18.6 per cent, posted by Sweden.

For 2011, only the United Kingdom had productivity growth higher (4.5 against 4.4 per cent) than in the previous year; productivity gains were smaller or dropped in the other 18 economies.

"(Manufacturing) labour productivity rose by more than 2 per cent in the majority of countries," the Labor Department says. "These productivity increases were generally driven by gains in output coupled with modest changes in hours."

Productivity growth in the Czech Republic, still a developing economy, eased from 13 per cent in 2010 to 10.1 per cent - the biggest gain last year. Singapore's was the second largest.

Australia, where productivity tumbled 4 per cent, was the worst performer. Productivity also dropped in Finland (-0.1 per cent), Italy (-0.4 per cent) and Japan (-2.8 per cent).

Productivity rose 2 per cent in the US, slowing from 11.2 per cent in 2010. In South Korea, the growth eased from 8.5 to 6 per cent. In Taiwan, it came down from 13.9 to 2.8 per cent.

While Singapore's ULC fell 2.6 per cent in the national currency, it jumped 5.7 per cent in US dollars last year. Only six other economies saw higher increases - Australia (15.8 per cent), Japan (15.7 per cent), Sweden (10.5 per cent), Norway (9.9 per cent), Finland (7.9 per cent) and Italy (7.7 per cent).

In 2010, Singapore's ULC dropped 12.8 per cent in US dollars; only Finland (-13.9 per cent) and Germany (-13 per cent) had bigger drops.

"The values of the currencies of all countries compared appreciated relative to the US dollar in 2011," the Labor Department says. "As a result, ULC in US dollars showed larger increases than ULC expressed in national currencies."

Of the economies tracked, 16 - including Singapore - had ULCs higher than that in the US (where the ULC was up 0.6 per cent) last year, which means they had become less competitive than Uncle Sam.

"The US improved its competitiveness the most against Australia and Japan due to the large appreciation of their respective currencies against the US dollar," the Labor Department says.

"However, US labour cost competitiveness deteriorated relative to South Korea (-2 per cent) and the Czech Republic (-0.2 per cent)."

The two were the only economies where ULCs fell.