Labour productivity down 16% in second quarter

  • Economy
  • Monday, 24 Aug 2020

Construction takes a big hit - YAP CHEE HONG/The Star

PETALING JAYA: Malaysia’s labour productivity per employment shrank by 16% to RM19,455 per person in the second quarter (Q2), with construction taking a big hit, according to the Statistics Department.

In its report on the performance of Malaysia’s labour productivity issued recently, it said total hours worked plunged by 27% to 6.2 billion hours from an average of 8.5 billion hours.

Chief statistician Datuk Seri Mohd Uzir Mahidin (pic below) said: “Value added per employment in this quarter dropped to RM19,455 per person as against the quarterly average of RM22,000 per person.”

The economy shrank by 17.9% in Q2 due to the full impact of the movement control order (MCO) imposed on March 18 due to the Covid-19 pandemic, with April the worst impacted by the slowdown in economic activities.

Mohd Uzir said employment which recorded 14.9 million persons (1Q20: 15.2 million persons) declined by 1.3% versus a growth of 1.6% in Q1.

“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.

“There were 2.7 million employed persons who were temporarily not working or were not able to work from home due to the MCO, ” he said.

As for labour productivity by value added per hour worked, he said: “The total hours worked in this quarter fell 28.2% (1Q20: -1.4%) to a total of 6.2 billion hours, lower than average of 8.5 billion hours per quarter.

“Average hours worked in Q2 was only 40.5 hours per week compared with 44.3 hours per week in the previous quarter.

“This has resulted in an increase in labour productivity by value added per hour worked by 15.6% with a level of RM46 per hour (Q1: RM40 per hour).

“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.”

Mohd Uzir said construction posted the highest fall of labour productivity by value added per employment to -40.8% (1Q20: -5.3%).

This was followed by the manufacturing (-17.3%), mining and quarrying (-17.1%) and services (-15.6%) sectors.

Agriculture was the only sector which posted growth during Q2 at 1.5%, rebounding from -8.9%.

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

Construction was the only sector which showed a decline in Q2 at 3.2% after registering -1.6% in Q1.

Globally, countries that implemented lockdowns to contain the outbreak, such as Singapore and the United Kingdom also experienced similar effects to their labour productivity. In particular, these two countries posted large declines of value added per employment in 2Q20 with -11.6% and -22% respectively.

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