IMPACT OF LABOUR PRODUCTIVITY OF THE NATIONAL KEY ECONOMIC AREAS (NKEAs)

Abstract

Under the Economic Transformation Program (ETP), three sub-sectors of National Key Economic Areas (NKEAs) have been identified, i.e. petroleum, oil palm and the electrical and electronics sub-sectors. The importance of NKEAs sub-sector to sustain the performance of the Malaysian economy inspired this study to examine the relationship between high skilled labour and its productivity level. Specifically, this paper focuses on the impact of highly skilled labour on productivity levels in sub-sectors of the NKEAs. Highly skilled labour consists of labour from the managerial and professional category, and, semi-skilled labour is the technical and supervisory category. This study utilizes data from Industrial Manufacturing Survey published by the Department of Statistics Malaysia, covering the period from 1985 to
2010. The results show that highly-skilled labour contributes significantly to the productivity of the overall NKEAs, and each sub-sector of the NKEA, except palm oil. Under the NKEAs sub-sectors, it shows only petroleum has a significant contribution to the productivity level both in the managerial and professional category also, technical and supervisory labour. Meanwhile, in the electrical and electronics industry, only managerial and professional labour has contributed significantly. However, in palm oil industry, unskilled labour has a significant contribution to the productivity level. In addition, this study also finds that capital intensity is important in affecting the productivity of the NKEAs sub sectors as well as the productivity of the manufacturing sector.