Compensation of employees contributes 34.8% of nominal GDP

by NURUL SUHAIDI / pic MUHD AMIN NAHARUL

EMPLOYEE Compensation (CE) contributed up to 34.8% of the GDP last year, an increase of 2.2% from the previous year, 2020.

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin (picture) said in a statement today that overall, the nominal GDP accelerated to 9% after a contraction of 6.3% in 2020.  

Meanwhile, Gross Operating Surplus (GOS) contributed 62.9% to the GDP and the remaining was contributed by net taxes accounting for 2.3% of the GDP.

Mohd Uzir said, these three components accounted for all the income earned by all the factors of production in an economy.

The services sector remained the largest contributor to the total CE which generated 62.8%.

He added that the CE in the production of goods and services rebounded to 2.2% in 2021 as against a decrease of 3% in the previous year.

“The CE in all economic sectors showed an improved performance in the year 2021 except for the construction sector, although it was 0.9% lower than the pre-pandemic level of 2019,” Mohd Uzir said.

The CE in the services sector grew 1.1% (2020: -1.3%) which was attributed to transportation and storage; and information and communication subsectors.

Meanwhile, the CE in the manufacturing sector grew significantly at 5.8% (2020: -1%) led by the CE in electrical, electronic and optical products.

In the meantime, CE for the agriculture sector accelerated to 8.2% (2020: 2%), mainly reflected by the higher commodities prices.

Mohd Uzir said CE in the mining and quarrying sector improved to 5.4% compared to a contraction of 13.3% in 2020.

Separately, the GOS, which made up the majority of GDP’s income component, saw double-digit growth of 14%, up from a decline of 6.8% the year before. This was the greatest growth rate since 2010 (16%).

According to Mohd Uzir, the number of GOS has climbed by RM57.3 billion, or 6.3%, above the pre-pandemic level.

“With the exception of the construction sector, all industries showed improved performance in 2021,” he said.

The GOS in the services sector recovered to 3.4%, which is attributable to the subsectors of wholesale and retail trade; food and beverage; and accommodation.

GOS in the manufacturing sector increased to 26.2%, driven by a strong increase in items made of rubber, plastic, chemicals and petroleum.

Likewise, GOS in the agriculture sector increased to 37.5% driven by growth in the subsectors of rubber, oil palm, livestock and other agriculture.

Due to higher gasoline costs, the mining and quarrying sector’s GOS increased to 26% from -27.7% in the previous year.

In the meantime, GOS in the construction industry continued to drop, this time by 5.5% rather than the 15.7% seen the year before.

In 2021, GOS contributed 62.9% of Malaysia’s GDP, up from 60.1% in 2020. Manufacturing contributed 23.9% of the total GOS, followed by the services sector with a contribution of 50.8%.

“Agriculture and mining and quarrying sectors formed 12.6% and 11.1% respectively. Meanwhile, the construction sector contributed 1.6%,” Mohd Uzir said.

Net taxes, the third source of income included in GDP, were up 2.3% of the overall economy in 2016, a fall of 8% from the decline of 30.2% in 2020.

Malaysia had the highest GOS percentage at 62.9% when comparing the GDP by Income Approach for a few selected nations in 2021.

Comparing the GOS, developed nations like the United States of America, Canada and European nations recorded a higher contribution from CE.

Nonetheless, the contribution of GOS exceeded the CE in the South-East Asian region.