Mr Patrick Tay Teck Guan, Member of Parliament of West Coast GRC: To ask the Minister for Trade and Industry (Industry) (a) what are the main reasons and which are the industries which contributed to the positive increase in productivity of 1% in 2016; and (b) what is the forecast for 2017 taking into consideration the productivity figures for the first half of 2017.

Answer :

1. Labour productivity, as measured by real value-added (VA) per worker, grew by 1.0 per cent in 2016, reversing the 0.2 per cent decline in 2015. When measured as real VA per actual hour worked (AHW), labour productivity growth was 1.4 per cent in 2016, compared to 1.0 per cent in 2015.
2. At the overall level, labour productivity growth in 2016 was supported by growth in real VA on the back of a pickup in external demand, which had benefitted outward-oriented sectors such as the Manufacturing sector. At the same time, both employment and the total number of hours worked grew at a slower rate, in part due to a slowdown in local workforce growth and a decline in foreign employment (excluding foreign domestic workers), especially in the Marine and Construction sectors.
3. By sectors, overall productivity growth in 2016 was primarily driven by the outward-oriented sectors. Collectively, the productivity of outward-oriented sectors rose by 3.1 per cent based on real VA per AHW or 1.8 per cent based on real VA per worker in 2016, while that of domestically-oriented sectors declined by 1.3 per cent based on both measures.^[1] Among the sectors, the highest productivity gains were seen in the Manufacturing (8.2 per cent based on real VA per AHW or 7.1 per cent based on real VA per worker) and Accommodation (5.6 per cent in both cases) sectors.
4. Within the Manufacturing sector, productivity growth was led by the Electronics and Biomedical Manufacturing (BMS) clusters. The productivity of the Electronics cluster was bolstered by strong growth in the semiconductors segment on the back of a pickup in global semiconductors demand. Similarly, the productivity of the BMS cluster was supported by robust expansions in both the pharmaceuticals and medical technology segments due to strong external demand. On its part, the Accommodation sector benefitted from a recovery in visitor arrivals, with gross lettings at gazetted hotels rising by 6.0 per cent in tandem with a 7.7 per cent increase in visitor arrivals.
5. For 2017, MTI expects the Singapore economy to grow by 2.0 to 3.0 per cent, with growth likely to come in at around 2.5 per cent on the back of a continued recovery in external demand. This is higher than the 2.0 per cent growth achieved in 2016. Consequently, labour productivity growth in 2017 is also expected to come in stronger than last year's.^[2]

[1] Outward-oriented sectors refer to Manufacturing, Wholesale Trade, Transportation & Storage, Accommodation, Information & Communications, Finance & Insurance and Professional Services. Domestically-oriented sectors refer to Construction, Retail Trade, Food Services, Other Business Services and Other Services Industries.

 [2] In the first half of 2017, overall labour productivity in terms of real VA per worker rose by 2.8 per cent over the same period of last year. At present, real VA per AHW is only available on an annual basis.