Pieces of productivity

a) Those who have been scamming the PIC had better watch out. All that equipment being bought for business and charged to the Productivity and Innovation Credit scheme have to be “in use’’ and on the company premises before cash claims can be made. I’m glad. I’ve heard too much about how the PIC is great because it gives out cash for anything to do with a business. There’s another bit in the legislation that was passed by Parliament yesterday. It’s about companies “engaged in objectionable arrangements which seek to abuse the scheme’’, according to an ST report. I suppose it refers to so-called consultancies which have sprung up to help people take advantage of PIC? It’s a maximum of three years jail and $10,000 fine.

b) It’s bound to come up. With our dismal productivity record, which averaged just 0.1 per cent from 2011 to second quarter of this year, someone is going to say if we’re measuring it right. So more indicators will be put up for the different sectors, according to the G. MTI’s Lee Yi Shyan said the construction sector, the laggard, uses value-add per worker but this might not be “reflective’’ of growth. If square metre constructed per man day is used, then you’ll see some progress. “If this increase is not reflected in the prices of their contracts, then the net effect may be a reduction in productivity.’’ In retail, there could be other indicators such as sales per square foot of retail space and the turn of inventory.The G might well be right that we need more specific measures, but I can’t help but think we’re also shifting the goal posts a bit because we can’t seem to score?

c) BT has some comments from the Monetary Authority of Singapore about productivity, more or less reiterating the point above. MAS said productivity growth can’t be an end in itself. We need to be more productive so that real wages will rise. It’s MAS’ job to make sure inflation stays low. Also, that low productivity doesn’t mean that welfare has deteriorated. More labour would be needed to ramp up construction, for example, and, mathematically, productivity will go down. I think to prevent people from rolling their eyes whenever they hear the word productivity, we might want to turn the discussion to the end result of productivity growth – more money in the wallet to buy more things. That’s something people can definitely understand

d) In any case, I noticed something interesting in both BT and ST.

Both practically gave the same background information which seems like a response to those who say that the target 2 to 3 per cent annual productivity growth is too high.

BT quoted an MTI statement: “While it was ambitious, it reflected the room for improvement after just 1 per cent growth on average in the decade up to 2009. Productivity is now expected to grow by slightly over 2 per cent per year on average in the first five years of the target period, but with almost all the gains being achieved in 2010 when the economy recovered strongly.”

ST quoted DPM Tharman who spoke on the matter last week: “We had in early 2010 set an ambitious target of achieving 2 to 3 per cent in annual productivity growth over a decade. We are now coming to the half-way mark at the end of 2014. In the first five years, productivity is expected to grow by slightly over 2 per cent per annum on average, but almost all the gains were achieved in 2010, when we were recovering from the recession.’’

Why this reiteration? And I STILL don’t understand what the phrase “almost all the gains achieved in 2010’’….So we already hit the target or what?