Malaysia’s labour productivity down by 16% in Q2

PETALING JAYA: Malaysia’s labour productivity per employment shrank 16.0% to RM19,455 per person in Q2’20 with total hours worked plunged to 6.2 billion from an average of 8.5 billion hours, according to the latest data by the Department of Statistics.

According to the chief statistician Datuk Seri Dr Mohd Uzir Mahidin, value added per employment in this quarter dropped to RM19,455 per person as against the quarterly average of RM22,000 per person.

He noted that Malaysia’s GDP fell 17.1% in the second quarter of the year following a marginal growth of 0.7% recorded in Q1 and employment for the period stood at 14.9 million persons, a 1.3% decline against a positive growth of 1.6% (15.2 million persons) reported in the previous quarter.

“The sluggish performance of labour productivity by value added per employment was following retention of employees, of which this group still had jobs but was on furlough,” Uzir said in a statement.

He highlighted that the Q2’20 labour force report revealed that there were 2.7 million employed persons who were temporarily not working or were not able to work from home due to movement control order (MCO).

For the quarter, average hours worked stood at 40.5 hours a week compared to 44.3 hours per week in the previous quarter, which resulted in labour productivity by value added per hour worked increased 15.6% with a level of RM46 per hour (Q1’20: RM40 per hour).

The chief statistician elaborated that the high growth in labour productivity by value added per hour worked was led by the larger decline in total hours worked as against contraction in value added.

By economic sectors, construction posted the highest fall of labour productivity by value added per employment which was negative 40.8% (Q1’20: -5.3%), followed by manufacturing (-17.3%), mining & quarrying (-17.1%) and services (-15.6%) sectors.

The department stated that agriculture was the only sector that posted a positive growth during the quarter at 1.5%, rebounded from -8.9%.

In terms of labour productivity by value added per hour worked, three sectors posted a double digit growth during the quarter namely services (17.2%), agriculture (16.1%) and manufacturing (15.2%) sectors, while mining and quarrying grew by 6.9%.

Meanwhile, construction was the only sector declined in 2Q’20 with a rate of 3.2% after registering -1.6% in Q1’20.

Globally, countries that implemented lockdowns to contain the outbreak such as Singapore and the UK also experienced similar effect to their labour productivity.

In particular, these two countries posted a large decline of value added per employment in Q2’20 with a rate of -11.6% and -22.0% respectively.

“In principle, the labour productivity influenced growth of gross national income (GNI) per capita whereby drop in labour productivity growth will lessen the GDP and GNI per capita,” said Uzir.

“Thus, it was observed that the country’s GNI per capita was RM36,493 in Q2’20 as compared to the quarterly average of RM45,000 for the past five consecutive quarters.”

In Malaysia, the MCO started on March 18, 2020 and subsequent extension of the MCO, conditional MCO and recovery MCO had caused temporary closure of businesses, as well as standard operating procedures to be adhered to resume their businesses.

The statistics department noted that the circumstances have limited room for employees to work optimally. Therefore, the scenario in the second quarter of 2020 was an extreme period to compare with historical data.

source https://www.thesundaily.my/business/malaysia-s-labour-productivity-down-by-16-in-q2-EX3550116