Employee productivity improves in India, Indonesia & Philippines; rest of Asia descends

According to the Workforce Analytics Institute, rising wage pressure, lack of skills to leverage technology, ineffective leadership and low engagement levels are making it difficult for firms to deliver productivity gains in Asian countries.

In Asia, most markets have recorded a slump in labour productivity, except for India, Indonesia and Philippines. In fact, the global decline in productivity growth is a serious threat to competiveness and profitability of organisations.

According to WAI (Workforce Analytics Institute), a partnership between The Conference Board and Mercer, rising wage pressure, lack of skills to leverage technology, ineffective leadership and low engagement levels are making it difficult for firms to deliver productivity gains.

Between the two periods, 1999–2007 & 2008–2016, Singapore and South Korea showed the largest drop in productivity per person, by 3.12 percentage points and 2.34 percentage points, respectively. In comparison, India recorded the highest gain in productivity—an increase of 2.71 percentage points, followed by Indonesia at 0.68 percentage points.

Even in China, including Hong Kong, the productivity has reduced by 1.92 percentage points and in Japan it has declined by 1.19 percentage points.

However, despite the decline, China still has a high per employee productivity. In the period 2008–16, China has maintained a productivity level of 5.82, second only to India, which is at 6.47. Japan is at the bottom of the list, with a productivity level of 0.29 per cent

Siddarth Mehta, leader, workforce planning & analytics, Mercer, says, “Across Asia, we are riddled with economies showing weak or slowing growth. Against this backdrop, productivity combined with rising wage pressure poses a serious threat to organisations’ profitability.”

“In Asia, where the demand for skilled labour far exceeds supply, companies in the region are encountering substantial difficulties. They are realising that the link between productivity and business performance is one of the key resources of an organisation, and if effectively managed, can lead to significant payoffs,” he adds.

“Gone are the days when productivity could spike simply with the introduction of technology. Going forward, companies need to be more innovative,” Mehta quips.

WAI suggests three key approaches and outlines strategies that organisations can use to enhance productivity—developing more effective leaders, leveraging technology and enhancing employee engagement.

Designing incentive schemes to motivate employees, or creating physical and virtual workplaces that promote teamwork, collaboration and engagement are also ways to provide a healthy environment for high performance.