The Effects of Health, Labor and Capital towards Labor Productivity in Manufacturing Industries
Keywords:
Capital, workers, health, labor productivity, manufacturing industries.
Abstract
The manufacturing industry is the focus of this study, in which the proportion of its contribution to economic growth is experiencing a decreasing trend recently. Does it involve factors such as the input of capital, health, or workers that give significant impacts on labor productivity in the Malaysian manufacturing industry? This paper discovered the relationship between capital, health, and workers that consist of foreign and local labor with the labor productivity in the Malaysian manufacturing industry from 1986 to 2020. The Cobb-Douglas production function was used to derive the model specification in this study. The results showed that all variables are significant, in which capital and health have a positive relationship, whilst the factor of labor including local and foreign labor has a negative relationship with labor productivity. These findings may provide some insights into the improvement of manufacturing industries’ performance in Malaysia. It would be useful in determining which input factors significantly affected the productivity of manufacturing labor.
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References
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Nikoli?, N., Jovanovi?, I., Nikoli?, ?., Mihajlovi?, I. & Schulte, P. (2019). Investigation of the Factors Influencing SME Failure as a Function of Its Prevention and Fast Recovery after Failure. Entrepreneurship Research Journal, 9(3).
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Saleh, A. S. & Ndubisi, N. O. (2006). An Evaluation of SME Development in Malaysia. International review of business research papers, 2(1), 1-14.
Sen, S. & Farzin, R. (2000). Downsizing, capital intensity, and labor productivity. Journal of Financial and Strategic Decisions, 13(2), 73-81.
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Siddique, H. M., Mohey-ud-din, G. & Kiani, A. (2018). Health, Education and Economic Growth Nexus: Evidence from Middle Income Countries. Global Social Sciences Review, 3(4), 68-86, 2018.
Siddique, H. M., Mohey-ud-din, G. & Kiani, A. (2020). Human Health and Worker Productivity: Evidence from Middle-Income Countries. International Journal of Innovation, Creativity and Change, 14(11), 523-544.
Singh, J., Singh, H. & Sharma, V. (2018). The success of TPM concept in a manufacturing unit–a case study. Journal of Productivity and Performance Management, 67(3), 536-549.
SMIDEC. (2002). SMI Development Plan (2001 – 2005): SMIDP Executive Summary, Percetakan. Percetakan Nasional Malaysia Berhad, Kuala Lumpur.
Soriano, B. & Garrido, A. (2016). How important is economic growth for reducing undernourishment in developing countries? Food Policy, 63, 87-101.
Sulaiman, N., Ismail, R. & Saukani, M. N. (2017). Globalization and total factor productivity: the case of the manufacturing sector in Malaysia. International Business Management, 11(2), 334-341.
Thangavelu, S. M. (2016). Productive contribution of local and foreign workers in Singapore manufacturing industries. Journal of Economic Studies, 43(3), 380-399.
Trpeski, P. & Cvetanoska, M. (2018). The impact of the main determinants and changes in agricultural labour productivity in Macedonia. European Scientific Journal, ESJ.
Ullah, S., Malik, M. N. & Hassan, M. U. (2019). Impact of health on labour productivity: empirical evidence from Pakistan. European Online Journal of Natural and Social Sciences, 8(1), 139.
Varaprasad, N. (2022). Vocational Education and Training in Singapore. In International handbook on education in South East Asia (pp. 1-25).
Verghese, A. G., Viswanathan, K. & Ramalingam, P. (2018). 5S implementation in the workplace-a conducive environment enhancing motivation in educational institutions. In Proceedings of the International Conference on Industrial Engineering and Operations Management (pp. 1392-1403).
World Development Indicator. (2022). Life expectancy at birth (indicator). World Development Indicator Press Release.
Zortuk, M. & Çeken, S. (2015). The relationship between health care expenditures and income in the selected transition economies: A panel smooth transition regression analysis. Romanian Journal of Economic Forecasting, 18(2), 105-18.
Azer, I., Hamzah, C. H., Aishah, S. & Abdullah, H. (2018). Regional Conference on Science, technology and social sciences (RCSTSS 2016). Reg. Conf. Sci. Technol. Soc. Sci.
Baker, H. K., Kumar, S. & Singh, H. P. (2019). Working capital management: evidence from Indian SMEs. Small Enterprise Research, 26(2), 143-163.
Barro, R. (1996). Three Models of Health and Economic Growth. Unpublished manuscript. Cambridge, MA: Harvard University.
Biyase, M. & Malesa, M. (2019). ife Expectancy and Economic Growth: Evidence from the Southern African Development Community. Economia Internazionale/International Economics, 72(3), 351-366.
Bloom, D. E. & Canning, D. (2000). The health and wealth of nations. Science, 287(5456), 1207-1209.
Bloom, D. E., Canning, D. & Sevilla, J. (2001). The Effect of Health on Economic Growth: Theory and Evidence. Working Paper 8587. National Bureau of Economic Research.
Brunello, G., Lodigian, E. & Rocco, L. (2020). Does low-skilled immigration increase profits? Evidence from Italian local labour markets. Regional Science and Urban Economics, 85, 103582.
Carvalho, N., Chaim, O., Cazarini, E. & Gerolamo, M. (2018). Manufacturing in the fourth industrial revolution: A positive prospect in Sustainable Manufacturing. Procedia Manufacturing, 21, 671-678.
Chaabouni, S., Zghidi, N. & Mbarek, M. B. (2016). On the causal dynamics between CO2 emissions, health expenditures and economic growth. Sustainable cities and society, 22, 184-191.
Chang, S. J. & Singh, H. (1999). The impact of modes of entry and resource fit on modes of exit by multi-business firms. Strategic Management Journal, 20(11), 1019-1035.
da Silva, A. F., Marins, F. A., Tamura, P. M. & Dias, E. X. (2017). Bi-Objective Multiple Criteria Data Envelopment Analysis combined with the Overall Equipment Effectiveness: An application in an automotive company. Journal of cleaner production, 157, 278-288.
Department of Statistics Malaysia. (2022). Employment Statistics 2021. Department of Statistics Malaysia Press Release.
Department of Statistics Malaysia. (2022). Gross Domestic Product Statistics 2021. Press Release Department of Statistics Malaysia.
Dhillon, B. S. (2006). Maintainability, maintenance, and reliability for engineers. CRC press.
Durdyev, S. & Mbachu, J. (2018). Key constraints to labour productivity in residential building projects: evidence from Cambodia. International Journal of Construction Management, 18(5), 385-393.
Friedberg, R. M. & Hunt, J. (2018). The impact of immigrants on host country wages, employment and growth. Interdisciplinary Perspectives on the New Immigration (pp. 89-110). Routledge.
Ghazilla, R. A., Sakundarin, N., Abdul-Rashid, S. H., Ayub, N. S., Olugu, E. U. & Musa, S. N. (2015). Drivers and barriers analysis for green manufacturing practices in Malaysian SMEs: preliminary findings. Procedia Cirp, 26, 658-663.
Grossman, M. (2017). On the Concept of Health Capital and the Demand for Health. In Determinants of Health (pp. 6-41). Columbia University Press, 2017.
Hooi, L. W. & Leong, T. Y. (2017). Total productive maintenance and manufacturing performance improvement. Journal of Quality in Maintenance Engineering.
Ibrahim, A. R., Roy, M. H., Ahmed, Z. & Imtiaz, G. (2010). An investigation of the status of the Malaysian construction industry. Benchmarking: An International Journal, 17(2), 294-308.
Ismail, R. (2015). Impact of foreign workers on labour productivity: analysis of firm-level data. International Journal of Productivity and Quality Management, 16(1), 36-53.
Ismail, R. & Yuliyusman, F. (2014). Foreign labour on Malaysian growth. Journal of Economic Integration, 657-675.
Jomo, K. S. (1993). Industrializing Malaysia: Policy, Performance, Prospects. Routledge.
Jordaan, J. A. (2018). Foreign workers and productivity in an emerging economy: The case of Malaysia. Review of Development Economics, 22(1), 148-173.
Kangasniemi, M., Mas, M., Robinson, C. & Serrano, L. (2012). The economic impact of migration: Productivity analysis for Spain and the United Kingdom. Journal of Productivity Analysis, 38(3), 333-343.
Madsen, J. B. (2016). Health, Human Capital Formation and Knowledge Production: Two Centuries of International Evidence. Macroeconomic Dynamics, 20(4), 909-953.
Mohd Fateh, M., Mohamed, M. R. & Omar, S. A. (2022). The Involvement of Local Skilled Labour in Malaysia’s Construction Industry Front. Built Environ, 8, 861018.
Mukhedkar, D. K. (2020). Impact of TPM Implementation on Organizations' Competitiveness. International Journal of Research and Analytical Reviews, 7(1), 791-796.
Mushkin, S. J. (1962). Health as an Investment. Journal of Political Economy, 70(5, Part 2), 129-157.
Nallusamy, S., Kumar, V., Yadav, V., Prasad, U. K. & Suman, S. K. (2018). Implementation of total productive maintenance to enhance the overall equipment effectiveness in medium-scale industries. International Journal of Mechanical and Production Engineering Research and Development, 8(1), 1027-1038.
National SME Development Council. (2010). SME Annual Report 2009/2010: Transformation to the New Economic Model. Percetakan Nasional Malaysia Berhad, Kuala Lumpur.
Nikiforakis, N., Oechssler, J. & Shah, A. (2019). Managerial bonuses and subordinate mistreatment. European Economic Review, 119, 509-525.
Nikoli?, N., Jovanovi?, I., Nikoli?, ?., Mihajlovi?, I. & Schulte, P. (2019). Investigation of the Factors Influencing SME Failure as a Function of Its Prevention and Fast Recovery after Failure. Entrepreneurship Research Journal, 9(3).
Noor, Z. M., Isa, N., Said, R. & Jalil, A. S. (2011). The impact of foreign workers on labour productivity in the Malaysian manufacturing sector. International Journal of Economics and Management, 5(1), 169-178.
O’Connor, K. J. & Graham, C. (2019). Longer, more optimistic, lives: Historic optimism and life expectancy in the United States. Journal of Economic Behavior & Organization, 168, 374-392.
OECD. (2023). Life expectancy at birth (indicator). OECD Press Release; doi: 10.1787/27e0fc9d-en (Accessed on 22 January 2023).
Rahman, N. A., Yaacob, Z. & Radzi, R. M. (2016). An Overview of Technological Innovation on SME Survival: A Conceptual Paper. Procedia-Social and Behavioral Sciences, 224, 508-515.
Saleh, A. S. & Ndubisi, N. O. (2006). An Evaluation of SME Development in Malaysia. International review of business research papers, 2(1), 1-14.
Sen, S. & Farzin, R. (2000). Downsizing, capital intensity, and labor productivity. Journal of Financial and Strategic Decisions, 13(2), 73-81.
Setiawan, N., Wakhyuni, E. & Siregar, N. A. (2020). Recruitment Analysis on Employee Performance With Variable Control As Moderating On Manufacturing Company. Ilomata International Journal of Management, (1), 102-112.
Siddique, H. M., Mohey-ud-din, G. & Kiani, A. (2018). Health, Education and Economic Growth Nexus: Evidence from Middle Income Countries. Global Social Sciences Review, 3(4), 68-86, 2018.
Siddique, H. M., Mohey-ud-din, G. & Kiani, A. (2020). Human Health and Worker Productivity: Evidence from Middle-Income Countries. International Journal of Innovation, Creativity and Change, 14(11), 523-544.
Singh, J., Singh, H. & Sharma, V. (2018). The success of TPM concept in a manufacturing unit–a case study. Journal of Productivity and Performance Management, 67(3), 536-549.
SMIDEC. (2002). SMI Development Plan (2001 – 2005): SMIDP Executive Summary, Percetakan. Percetakan Nasional Malaysia Berhad, Kuala Lumpur.
Soriano, B. & Garrido, A. (2016). How important is economic growth for reducing undernourishment in developing countries? Food Policy, 63, 87-101.
Sulaiman, N., Ismail, R. & Saukani, M. N. (2017). Globalization and total factor productivity: the case of the manufacturing sector in Malaysia. International Business Management, 11(2), 334-341.
Thangavelu, S. M. (2016). Productive contribution of local and foreign workers in Singapore manufacturing industries. Journal of Economic Studies, 43(3), 380-399.
Trpeski, P. & Cvetanoska, M. (2018). The impact of the main determinants and changes in agricultural labour productivity in Macedonia. European Scientific Journal, ESJ.
Ullah, S., Malik, M. N. & Hassan, M. U. (2019). Impact of health on labour productivity: empirical evidence from Pakistan. European Online Journal of Natural and Social Sciences, 8(1), 139.
Varaprasad, N. (2022). Vocational Education and Training in Singapore. In International handbook on education in South East Asia (pp. 1-25).
Verghese, A. G., Viswanathan, K. & Ramalingam, P. (2018). 5S implementation in the workplace-a conducive environment enhancing motivation in educational institutions. In Proceedings of the International Conference on Industrial Engineering and Operations Management (pp. 1392-1403).
World Development Indicator. (2022). Life expectancy at birth (indicator). World Development Indicator Press Release.
Zortuk, M. & Çeken, S. (2015). The relationship between health care expenditures and income in the selected transition economies: A panel smooth transition regression analysis. Romanian Journal of Economic Forecasting, 18(2), 105-18.
Published
2023-05-11
How to Cite
Mohd Nor, S., Sahudin, Z., & Subramaniam, G. (2023). The Effects of Health, Labor and Capital towards Labor Productivity in Manufacturing Industries. Information Management and Business Review, 15(1(I)SI), 121-130. https://doi.org/10.22610/imbr.v15i1(I)SI.3403
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Research Paper
Copyright (c) 2023 Saffiah Mohd Nor, Zahariah Sahudin, Geetha Subramaniam
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