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People and mindset change the way forward

As Singapore works on its way forward, the very same challenges it has faced since Day One - land and labour constraints - will still be there.


AS Singapore works on its way forward, the very same challenges it has faced since Day One - land and labour constraints - will still be there.

The first is more easily solved, with a more targeted allocation of land, whether for industrial estates or public housing. The latter, however, is more complex.

The Singapore government has historically alleviated the impact of the country's small labour force and low birth rate through a liberal immigration policy. But the backlash in recent years against the influx of low-cost, low-skilled foreign workers, plus the impact of that on the structure of economic growth, resulted in a re-think of this policy.

Government leaders have repeatedly flagged Singapore's population challenge. The number of people aged 65 and above in Singapore will double in 15 years, said Second Minister for Trade and Industry S Iswaran recently.

"Apart from policies aimed at promoting marriage and parenthood, as well as carefully calibrated immigration, we must focus our efforts on strengthening the Singaporean core of the workforce," he said.

Besides enhancing the participation rates of women and older workers in the workforce, the government is pushing to boost the skills of Singapore's workers with SkillsFuture as well.

This initiative would also help to support the city-state's shift in economic direction towards innovation and value creation. "With deeper skillsets, not only can you make our global business hub more 'sticky', you can become more innovative and more international," Teo Eng Cheong, CEO of IE Singapore, told BT. "It is essential for our traditional strategy and also this new shift."

This comes as Singapore braces itself for a lacklustre global economy, in which growth in both developed and developing markets have slowed.


"What this means is that we have to focus even more sharply on restructuring our economy, and being more innovative in everything we do, so that we can raise productivity and raise incomes of Singaporeans," Deputy Prime Minister Tharman Shanmugaratnam said at a May Day dinner. "That is the only way we can do well in a slow-growth world. It is also the only way we can overcome the constraints of a tight labour market."

To achieve even the slower 3 per cent average growth for the rest of this decade will be an "increasing challenge", given the slowdown in the growth of Singapore's labour force, he added.

The government has reduced foreign workforce inflows by about two thirds, from about 80,000 in 2011 to 26,000 last year, so as to support the long-term restructuring of the economy.

"Resident labour force growth is likely to slow significantly in the coming years. In fact, beyond 2020, our resident labour force growth rate is expected to be negligible," Mr Tharman said. "There is no other option for Singapore but to persevere in this effort, so as to raise productivity and incomes."

The productivity drive has gained traction on the ground, said Ministry of Trade and Industry permanent secretary Ow Foong Pheng in an e-mail response to BT's queries. "More businesses are adapting to the new environment and changing their business models."

The biggest challenge for SkillsFuture is in getting small and medium enterprises - which hires 70 per cent of the population and accounts for half of Singapore's GDP - on board, said Mr Tharman. The government has urged trade associations and chambers to work with their members on this, and will also develop a pool of mentors from specific industries and firms to help SMEs which often lack the capacity to train and develop people.

At its heart, SkillsFuture marks a change in the government's view of learning, and is a response to a world that is changing more rapidly than before, and with longer life expectancies.

"With SkillsFuture, we have embarked on a major new phase of investment in our people, to develop every Singaporean to the fullest, not just in school but throughout life . . . No one can honestly tell what they will be doing a decade or two after leaving school," said Mr Tharman.

"As individuals, we have to view the education that we get when we are young as but the starting point of a journey of personal learning, and self-renewal throughout our lives."

Most importantly, in order to succeed in a more complex world, Singapore will need to change existing mindsets.


Workers will have to value enterprise and creativity - not safe jobs at multinational firms, said Morgan Stanley head of Asean research Hozefa Topiwalla.

Entrepreneurs and business leaders, too, must have "the fire in their belly" to chase after new businesses and take a different route from what has been established, said IE's Mr Teo, adding that the government also needs to develop an environment that supports value creation.

Singapore's new economic direction of innovation and value creation would ultimately hinge on this mindset change. "The risk is that despite all the effort, you cannot activate the entrepreneurial spirit, because it's not something you can control," said Mr Topiwalla.

Prime Minister Lee Hsien Loong, at a Smart Nation forum in April, envisioned the way forward for Singapore in becoming more entrepreneurial. "Ultimately, you need a culture, that spunk, daring to dream, daring to fail, daring to take on big challenges," he said. ""Many countries have tried to nurture this culture, only a few have succeeded."