Raising productivity growth

I REFER to the report “Malaysians lag in productivity” (see the related posts below). The recent findings by the Malaysian Productivity Corporation (MPC) shows that our worker productivity levels, productivity growth and productivity value are lower than several leading industrialised economies and even some developing countries in our region.

That’s serious and calls for a more specific analysis of the situation to identify the real causes and institute urgent remedial measures involving all factors that influence productivity. MPC is of the view that even with our 2011 productivity growth rate of 4.55%, we are still on track to become a high-income nation by 2020.

It must, however, be understood that when any single factor of productivity or total factor productivity is low, economic growth will not be sustainable over the long-term and will instead decline and with it bring down both employment and incomes.

Some reasons have been cited for our low worker productivity levels, such as workers who prolong working time to perform a job thus increasing costs, poor working conditions, low-level of worker motivation and lack of incentives, among others.

As the Malaysian Trades Union Congress (MTUC) and the SME Corp have pointed out, a major factor that keeps worker productivity levels low is the massive hiring and continuing dependence on low-skilled, especially foreign, workers, who make up a fifth to a third, or even more, of the workforce in various industries.

Also, the use of low, or even medium, level technology and the preponderance of low value-added industries dominating the economy, contribute to low worker productivity levels.

Clearly, in order to boost overall productivity levels, there is an urgent need to pursue quality growth by investing in and providing incentives for:

1. > Upgrading skills;
2. > Increasing local worker employment levels;
3. > Encouraging high value-added industries in all sectors of the economy; and,
4. > Tightening foreign worker policies.

Other measures should include increased partnerships with leading global companies, developing the talents and skills needed to support such businesses, promoting high-end local enterprises and investing in a strong 21st century education system.

While rewarding employees through increases in wages and benefits might please them, it should never be done on an adhoc basis nor as a mere handout exercise for whatever reason.

If rewards are to serve as incentives to increase productivity levels, such benefits must be for better performance that is measurable, and that leads to higher level and quality of output and gains.

Underlying the need to raise productivity growth and worker productivity levels is the importance of cooperation between the management or employers and workers in fostering a conducive working environment and increasing the quantum and value of goods produced or services delivered.

There has to be genuine scope for ongoing mutual dialogue among these “social partners” that promotes consensus-building and the democratic involvement of those with vital stakes in raising performance, productivity, profitability and personal rewards.

RUEBEN DUDLEY Former United Nations / ILO Regional Deputy Director for Asia & the Pacific

Related posts:
Malaysians lag in productivity 

Performance culture lacking, Malaysian workers!

Are we competent with competencies?