Productivity

If you haven’t seen this word recently, you are probably in another part of this world. It’s all over the press and is part of the Economic Strategies Committee (ESC) recommendations. This prompted me to take a look at the level of our productivity over the years. This is a topic that is very close to my heart and something that has been bothering some of my dearest friends since the end of 2009.

Let us start by examining how productivity is calculated. As extracted from the Department of Statistics, Singapore, which I quote here, “Productivity measures how much output is produced relative to the inputs of labour, capital (plant and equipment) and technology. An increase in productivity implies that more output can be produced with the same (or less) inputs.”

In particular for the financial/services sector, it might be measured based on revenue generated by an employee divided by his/her salary, meaning

Productivity = A / B, where
A = Revenue Generated
B = Salary of employee

Without any advanced mathematics, one would know that to increase the productivity, it really means increasing revenue or reducing salary of the employee. I really hope that the result of the recommendations would be more of the former than pure cutting back on employee’s salary. Yes, it would lead to short term measures of productivity gains but over the mid to longer term, it could result in other repercussions including low staff morale and eventually staff turnover. So if you are employer and you are reading this, please do not try to increase productivity merely by cutting pay of your employees.

On a broader perspective, I secretly hope that ESC recommendations would result in the creation of more high value jobs in Singapore’s financial center. This sentiment is shared amongst some of my peers. Over the last couple of years, job creation in Singapore seems to be concentrated on middle and back office roles. While these roles still provide a good level of income, many crave for the intellectual simulation and the dynamism that a front office role may bring. Others are simply more pragmatic and are drawn by the potential returns. However, while we speak, the China story continues to play out. Backed by a huge hinterland, it seems logical that financial institutions looking to expand into Asia would choose Hong Kong or even Shanghai to base their operations. My bet is on North Asia but I must qualify that Singapore can have a chance if it can concentrate and excel in specific niche areas such as Private banking/Asset management, FX/Rates/Commodities trading, etc…

Nevertheless, Hong Kong and China remains a destination pretty much in my radar for future career opportunities. Reverse migration and re-tracking the route that my forefathers took when they came down south looking for a better living seems the norm these days.

Anyone from Singapore working in the financial industry there? Do drop me a note, interested to find out more.