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How Malaysia's labour productivity fared by sector in Q4 2023

How Malaysia's labour productivity fared by sector in Q4 2023

The mining and quarrying sector saw a positive shift in labour productivity, marking a 1.8% increase in value added per hour worked, contrasting with -0.4% recorded in the previous quarter.

Malaysia's economy improved in Q4 2023, standing at a 3% year-on-year growth rate of value added and reaching RM410bn, compared to the previous quarter's 3.3% (Q3 2023: RM398bn).

This improvement marked an overall 2023 performance of 3.7% (2022: 8.7%), according to the Department of Statistics (DOSM)'s latest report.

Further, the marginal growth in value added resulted in a 2.3% growth in total hours worked, slower than in the third quarter of 2023 (4.2%).

However, there was a notable improvement in Malaysia’s labour productivity measured as value added per hour worked, with a 0.7% rise to RM43.5 per hour, compared to a 0.9% decline to record RM42.2 per hour in Q3 2023. This, DOSM added, was despite the decline in average hours worked, dropping by -0.2% from 1.5% in the previous quarter. 

Meanwhile, labour productivity per employment growth eased to RM25,080 per person in Q4 2023, (Q3 2023: 0.6%; RM24,470 per person), following a slower economic performance in the quarter.

Despite this, the total number of employees continued to increase by 2.5%, reaching 16.3mn people, compared to the 2.7% growth in Q3 2023, where it also stood at 16.3mn persons. 

The report delved into how Malaysia's labour productivity fared by sector:

In the agricultural sector,

  • Labour productivity (value added per hour worked) increased by 1% compared to a decrease of 0.9% in Q3 2023 and a decrease of 0.8% throughout 2023 (2022: -1.2%).
  • Value added per hour worked rose by 1.9% to record RM25.7bn in Q4 (0.9%; RM27.9bn).
  • Total hours worked grew by 0.9% to 1,009mn hours (Q3 2023: 1.8%; 1,035mn hours). Average hours worked per week increased by 0.1% to 41.9 hours (Q3 2023: 1.1%; 42.2 hours).
  • Labour productivity in terms of value added per employment increased by 1.1% (Q3 2023: 0.3%) and by 0.04% throughout the year (2022: 0.8%).
  • Total employment grew by 0.8% to 1.9mn persons (Q3 2023: 0.6%; 1.9mn persons).
  • Value added per hour worked was RM25.5 per hour (Q3 2023: RM27.0 per hour), and value added per employment was RM13,871 per person (Q3 2023: RM14,792 per person).

The mining and quarrying sector saw:

  • Labour productivity increase by 1.8% in value added per hour worked, contrasting with the previous quarter's -0.4%.
  • The year's labour productivity growth showed a smaller negative rate at -0.9% compared to the previous year (2022: -1.2%).
  • The sector recorded a 3.8% growth in value added, totalling RM26.3bn (Q3 2023: -0.1%; RM23.1bn).
  • Total hours worked increased by 2.0% to 46.6mn hours (Q3 2023: 0.4%; 45.9mn hours).
  • Average hours worked grew by 0.7% to 47.1 hours per week, down from 1.7% growth in Q3 2023 (47.6 hours per week).
  • Labour productivity per employment expanded by 3.6% compared to the previous quarter's -0.5%, while posting 0.6% growth during 2023 (2022: 1.4%).
  • Total employment maintained a positive growth of 0.2%, reaching 76.3mn persons, slightly lower than the 0.4% growth in Q3 2023 (76.4mn persons).
  • Value added per hour worked amounted to RM563.5 per hour compared to RM503.3 per hour in Q3 2023, and value added per employment posted at RM344,483 per person (Q3 2023: RM302,703 per person).

In the manufacturing sector, 

  • Labour productivity per hour worked decreased by 2.8% in Q4 2023, showing improvement from -4.5% in the previous quarter. However, 2023 saw a larger negative growth of 2.8% compared to -0.1% in 2022. This was due to a further drop-in value-added growth to -0.3% from -0.1% in Q3 2023.
  • Total hours worked continued to show positive growth of 2.6% to reach 1,674mn hours (Q3 2023: 4.6%; 1,669 million hours). Average hours worked declined by -0.4% after three consecutive quarters of positive growth.
  • Five out of eight subsectors showed an increase in labour productivity per hour worked compared to the previous quarter:
    • Vegetable and animal oils & fats and food processing: 2.9% (Q3 2023: -3.5%)
    • Non-metallic mineral products, basic metal, and fabricated metal products: 2.7% (Q3 2023: 2.5%)
    • Textiles, wearing apparel, and leather products: 1.5% (Q3 2023: 2.8%)
    • Transport equipment, other manufacturing, and repair: 1.2% (Q3 2023: -2.0%)
    • Wood products, furniture, paper products, and printing: 0.1% (Q3 2023: -6.4%).
  • Labour productivity by value added per employment further dropped to -3.2% compared to the preceding quarter (Q3 2023: -3.1%), with 2023’s growth also dropping to -2.1% from 4.1% in 2022.
  • Total employment sustained at 3.0% after registering 2.8mn persons during this quarter (Q3 2023: 3.0%; 2.8 million persons). Four subsectors increased in growth of labour productivity per employment:
    • Vegetable and animal oils & fats and food processing: 1.7% (Q3 2023: -2.5%)
    • Transport equipment, other manufacturing, and repair: 1.9% (Q3 2023: -1.0%)
    • Beverages and tobacco products: 2.1% (Q3 2023: 0.4%)
    • Non-metallic mineral products, basic metal, and fabricated metal products: 2.2% (Q3 2023: 2.8%).
  • Value added per hour worked was RM56.9 per hour (Q3 2023: RM55.3 per hour), and value added per employment was RM33,746 per person (Q3 2023: RM32,801 per person).

The construction industry saw:

  • Labour productivity per hour worked grow by 2.6% this quarter, slower than the previous quarter's 5.2%.
  • There was a significant improvement from -2.0% in 2022 to +4.4% in 2023.
  • Value added increased marginally by 3.6% to RM14.4bn (Q3 2023: 7.2%; RM14.6bn).
  • Total hours worked grew by 0.9%, down from 2.0% in Q3 2023. Average hours worked declined by -0.2% to 45.9 hours per week (Q3 2023: 0.4%; 46.3 hours per week).
  • Labour productivity per employment grew by 2.4% in Q4 2023, slower than the previous quarter's 5.7%.
  • Throughout 2023, there was a 5.0% growth in labour productivity per employment compared to 5.2% in 2022. Total employment increased marginally by 1.2% compared to the previous quarter's 1.4%.
  • Value added per hour worked was RM17.2 per hour (Q3 2023: RM17.5 per hour), while value added per employment was RM10,251 per person (Q3 2023: RM10,474 per person).

In the services industry, 

  • Labour productivity, measured as value added per hour worked, increased by 1.5% (Q3 2023: 0.1%), aligning with a 4.2% growth in value added (Q3 2023: 5%). However, the growth rate was slower this year, at 1.1% compared to 3.3% in 2022. Total hours worked increased marginally by 2.6% to 5,854mn hours (Q3 2023: 4.9%; 5,830mn hours). Average hours worked declined by -0.2% to 44.5 hours per week from 1.8% (44.8 hours per week) in Q3 2023.
  • Except for finance and insurance (which showed a double-digit negative growth of -13.2% in Q4 2023 from -4.9% in Q3 2023) and food & beverages and accommodation (negative growth of -5.3% from -5.2% in Q3 2023), every services subsector expanded in Q4 last year.
  • Labour productivity per employment grew by 1.2% compared to 1.9% in the preceding quarter, with an annual growth of 1.8% (2022: 6.5%). Total employment increased by 2.9% to 10.2mn persons (Q3 2023: 3.1%; 10.1mn persons).
  • Except for finance and insurance (Q4 2023: -6.3%; Q3 2023: -2.2%) and food & beverages and accommodation (Q4 2023: -4.0%; Q3 2023: -3.2%), most services subsectors showed an increase in labour productivity per employment.
  • Value added per hour worked was RM41.6 per hour (Q3 2023: RM40.3 per hour), while value added per employment was RM23,871 per person (Q3 2023: RM23,339 per person).

READ MORE: Malaysia's economic growth returns to normal in 2023: MOF

Lead image / Malaysia Ministry of Economy Department of Statistics Malaysia

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