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Singapore must prepare for economic slowdown: PM Lee

Country better placed than most others to tackle twin challenges of globalisation and technology advances
Tuesday, October 27, 2015 - 05:50
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Mr Lee believes the way forward for Singapore is not to resist globalisation, but to ride the power of free markets to its advantage.

Singapore

WITH the global economy facing cyclical headwinds, Prime Minister Lee Hsien Loong has warned that Singapore must brace itself to handle a possible downturn.

At a dinner organised by the labour movement on Monday, he spoke of how the United States - the world's largest economy - was soft, while Europe was in a stagnant state and China was experiencing a slowdown of its own.

Here in Singapore, exports are flat and port operator PSA is handling fewer containers, he said. Gross domestic product expanded just 1.4 per cent year on year in the three months ended September, slowing from 2 per cent growth in the June quarter.

"We have to be prepared for a slowdown, and possibly a downturn," Mr Lee told some 1,100 unionists, business leaders and overseas guests at the opening dinner of the National Trades Union Congress' (NTUC) national delegates conference.

Among those in attendance at the Orchid Country Club were Deputy Prime Minister Teo Chee Hean, Manpower Minister Lim Swee Say, labour chief Chan Chun Sing and visiting International Labour Organization director-general Guy Ryder.

In a 40-minute speech, the prime minister outlined two main challenges facing the world today. He cited globalisation, which brings the benefits of a worldwide division of labour but also puts workers under pressure as they have to compete with those from other countries.

Advances in technology, meanwhile, is also disrupting industries and displacing workers at all levels, be they blue-collar workers in the factories or professionals such as lawyers and doctors.

These trends are putting pressure on wages and causing them to stagnate, said Mr Lee, adding that old jobs were being lost as whole industries and companies experience changes.

"Skills become obsolete faster than before. New jobs come in but they take time, and to learn new skills takes time. For workers to change jobs and industries, fit into a new niche and become productive again, and earn the same as before but hopefully more, it's not always so easy, especially for older workers."

He made the point that Singapore, a developed economy, could not afford to resist globalisation or hold back the progress of technology.

"If we try to do that, our economy will stagnate, our workers will become uncompetitive, and Singapore will be left behind," he warned.

The way forward for the Republic must be to "ride the wave" and use the power of free markets to its advantage.

Mr Lee stressed that the Singapore government had already played a major role in this effort. The state has created the basic conditions for markets to operate properly, set the rules and helped mitigate the excesses and negative effects of a market system.

He shared how Singapore had strengthened the country's social safety nets, rolled out a progressive wage model and will be implementing new initiatives such as MediShield Life and Silver Support soon.

The government is also upgrading the economy to keep businesses and workers competitive, said Mr Lee. To drive this effort, a new committee on the future economy, led by Finance Minister Heng Swee Keat, will review Singapore's economic strategies.

"We know our direction, (which is) to improve productivity so that we can sustain higher wages for all. But we need to review specific measures - how to help our domestic sectors grow, how to attract investments and help companies develop new markets, and how to make best use of the foreign workers and talent that we need in Singapore," he said.

Overall, Singapore is in a better position than most other countries to tackle the tough challenges ahead. Mr Lee highlighted the Republic's strengths such as a well-educated population, an ethos that is outward-looking, a tech-savvy society and competent unions.

The prime minister also spent time talking about Singapore's unique tripartism model, a "relationship of trust" among the three parties that has been built up over decades.

"Over the last 50 years, we've nurtured a special model of tripartism that enabled our people to excel, our businesses to grow, and our nation to thrive. It's been a major ingredient of our success and it comes down to having good (tripartite) leaders."

In a changing environment, Mr Lee said, tripartism remained the right formula to take Singapore into the next phase of its development.

He urged each of the tripartite partners to update their approach. The government will develop new economic policies, and employers have to both ensure that companies remain viable and continue to seize new business opportunities.

On their part, the unions have to stay relevant to a new generation of members in a new economy, and encourage workers to continually improve themselves.

Separately, with the NTUC ready to elect a new 21-member central committee via secret ballot on Thursday, the third and final day of its national delegates conference, Mr Lee urged the unions to give a strong mandate to their new leadership to take the labour movement forward.

Chan Chun Sing became the new NTUC secretary-general in May this year, taking over from Lim Swee Say. Among those stepping down is NTUC president Diana Chia, who is moving on after nearly four years in that position.

About 800 union delegates and observers - who represent the 60 NTUC-affiliated unions and one association - are taking part in this week's conference, which is held once every four years.

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