A Decomposition Analysis of Singapore’s Unit Labour Cost
This article examines the drivers of recent trends in Unit Labour Cost (ULC) for the overall economy and the manufacturing sector. In particular, the changes in ULC are decomposed into the contributions of changes in labour productivity and Total Labour Cost (TLC) per worker. Changes in TLC per worker are in turn further decomposed into the contributions of different labour cost components.
ULC is defined as the TLC per unit of gross real valued-added (VA), and is commonly seen as a measure of cost competitiveness. In Singapore, the ULC is collected at the economy-wide level and also for the manufacturing sector.
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