Malaysia’s labour productivity plunges for Q2 2020

This is in line with a 17.1% contraction of the economy in the same quarter, as total hours worked dropped because of COVID-19.
By: | August 20, 2020
Topics: Compliance | Job Cuts | Malaysia | News | Restructuring

Major economic sectors across Malaysia registered significant falls in labour productivity in the second quarter of 2020, said the Department of Statistics Malaysia (DOSM).

Construction was most badly hit, registering a 40.8% fall in labour productivity by value added per employment. This was followed by manufacturing (-17.3%), mining and quarrying (-17.1%) and services (-15.6%), with agriculture (1.5%) the only sector to post positive growth during the quarter.

These figures were published in the Labour Productivity report for Q2 2020 by economic activity, defined as value added per employment and value added per hour worked.

The report also highlighted that Malaysia’s labour productivity per person employed shrank 16% to RM$19,455 (US$4662), with total hours worked dropping from an average of 8.5 billion to 6.2 billion hours.

Datuk Seri Mohd Uzir Mahidin, Chief Statistician Malaysia, added, “Value added per employment in this quarter dropped to RM$19,455 per person as against the quarterly average of RM$22,000 (US$5,272) per person.

“Employment, which recorded 14.9 million persons, declined 1.3% as against a positive growth of 1.6% in Q1 2020.”

He attributed the “sluggish performance” of labour productivity by value added per employment partially to the retention of employees who still had jobs but were placed on furlough.

The DOSM’s Labour Force Report for Q2 2020 had earlier reported 2.7 million employed persons who were temporarily not working or were not able to work from home due to Malaysia’s movement control order (MCO).

READ: Malaysia posts worst economic performance in more than two decades

Malaysia introduced the MCO on March 18, which restricted the movement of people around the country and forced the temporary closures of businesses. This has since moved into a recovery phase, which is slate to end in August 31.

Average hours worked in Q2 2020 was clocked at 40.5 hours per week as compared with 44.3 hours per week in the first quarter, as Mohd Uzir explained, “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.”

Malaysia reported a GDP contraction of 17.1% for Q2 2020, with the central bank predicting the economy to shrink between 3.5%-5.5% in 2020, before rebounding to between 5.5% and 8,8% in 2021.