Labour productivity: an important business strategy in manufacturing

Abstract

This paper attempts to highlight the importance of productivity and efficiency in creating wealth or value added, particularly in manufacturing. The essential element is the measuring of “labour productivity” in selected manufacturing sectors in the economy. In essence, the approach is the calculation of labour coefficients as rough estimates of labour productivity. Hypothetical examples of a number of selected manufacturing sectors in three ASEAN countries are presented. This enables one to make a comparison between labour coefficients of different sectors or of the same sectors in different countries. Since labour productivity can also relate to efficiency and technological usage, it is prudent that this approach will at least show an indication of a country’s competitive advantage vis‐a‐vis other countries. Finally, it helps leaders of large organisations to make investment decisions particularly with respect to plant location.