Relationships Among Output, Wages, Productivity and Employment in the Malaysian Electronic and Electrical Sub-sector

The Malaysian electronic and electri cal sub-sector has been the most important component of thenation s manufacturing sector. As is widely known, the sector has played a vita l role in the nation sexport, employment as well as overall economic growth. Considering the importance of the subsector,it is imperative that we ensure sustainable growth of the sub-sector and that competitivenessis maintained or even improved. This study is particularly aimed at investigating the linkagesbetween output, productivity, wage and lab our. As is widely acknowledged, wages may increase aslong as it is commensurate with a higher increase in productivity. However, changes in wages canactually affect employment. Unit root tests indicate that all of the above variables are I (l ) .j ohansen s procedure was conducted to see the long run and short run re lationships between thevariables . The j ohansen co integration test res ults revealed that a long-ru n equilibrium re lationshipexists among the variables. From the short run dynamic analysis, we found that except for realwages, labour productivity and employment are statistically significant in influencing output.