Companies and policies must adapt to continued tight labour market

THE Singapore economy will no doubt witness many changes over the next decade. But one thing that very likely, if not certainly, will not change is the state of the labour market; it will continue to be tight - and might even get tighter. That was the sobering message from Manpower Minister Tan Chuan-Jin during the parliamentary debate on his ministry's annual budget on Monday.

The main reason: a shrinkage in the number of local workers entering the workforce by as much as 80 per cent in 2019 compared to today, combined with continued controls on the number of foreign workers. Such prolonged, and progressively increasing, labour market tightness has important long-term implications - for companies, government policies and the economy.

On their part, companies have already started adjusting to the "new normal", with the tougher controls on foreign workers since 2010. But they will need to do much more. One step is to restructure internally to maximise the use of their workforce and minimise adding more workers, while continuing to grow their revenues and profits. Apart from moving traditional labour-intensive activities overseas (a process which is already advanced), this might involve offshoring or outsourcing non-core operations such as back-office, IT and accounting - which sometimes comprise large departments within companies, often out of sheer habit.