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SINGAPORE BUDGET 2019

Tackling Singapore's skills shortage likely to lead Budget agenda

Recent suggestions include extension of salary support schemes, enhancements to existing initiatives, top-up of SkillsFuture credits

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Pundits are widely expecting a fresh injection of support targeted at worker retraining and reskilling in the upcoming Singapore Budget 2019.

Singapore

PUNDITS are widely expecting a fresh injection of support targeted at worker retraining and reskilling in the upcoming Singapore Budget 2019, especially for groups that are particularly vulnerable to economic restructuring such as older staff and skilled professionals.

Analysts The Business Times spoke to were unanimous in their views that Finance Minister Heng Swee Keat will be tackling the skills shortage challenge during his Budget speech on Feb 18 - the only question is how.

Recommendations of late include the extension of salary support schemes, enhancements to existing initiatives such as the Adapt and Grow initiative, and a top-up of SkillsFuture credits, to prepare the workforce for an increasingly digital future.

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But even with the elections said to be drawing close, some industry watchers are also not writing off the possibility of the easing of manpower quotas in emerging deep tech areas on the back of Singapore's ambitions to be a Smart Nation.

UOB economist Barnabas Gan said: "The move to promote skills related to technology such as artificial intelligence, big data and robotics will likely be emphasised in the coming Budget."

"In order to emphasise the adoption of such technologies, there will be a demand for certain skillsets and the government may revise their foreign worker quotas to meet this changing industry demand."

Ho Meng Kit, CEO of the Singapore Business Federation (SBF), said it would be "useful" if the quotas for skilled labour in certain sectors that are currently lacking in Singapore can be increased. This could help ease the problem of skills matching that businesses currently face, he said.

"For example, we have heard feedback that companies need skilled IT specialists to help them digitalise," he noted. "There is a short window for this as we want to push our companies to digitalise quickly."

However, he observed that the current local supply of IT talent is "not adequate" and while there are steps to build such a talent pool, there will be a "time-lag" as the education system catches up.

"In the meantime, can there be some flexibility for companies to bring in these foreign IT specialists?" he added.

The government has taken steps in this area, such as through the Capability Transfer Programme - first announced in October 2017 - to provide funding support for overseas experts to transfer skills and knowledge to local employees.

But industry watchers pointed out that skills transfers take time to bear fruit and companies are being forced to scale back their expansion plans in the meantime. This, in turn, could hold back economic growth.

In a report by Maybank Kim Eng, economists Chua Hak Bin and Lee Ju Ye wrote: "We would like to see some targeted relaxation of foreign manpower or immigration policies given the acute labour market tightness and cost pressures in certain segments."

Stricter foreign manpower policy is hurting growth prospects and constraining companies from expanding and investing, they added.

But on the other end of the spectrum, DBS senior economist Irvin Seah suggested that existing guidelines pertaining to skilled foreign workers could be tightened through an upward adjustment in the minimum salary requirements for employment pass - currently at S$3,600 - and more stringent requirements beyond the Jobs Bank under the Fair Consideration Framework, which requires companies to advertise job openings on the Jobs Bank before submitting Employment Pass applications.

Part of the rationale behind this is to alleviate the uncertainties faced by the professionals, managers, executives and technicians (PMETs) in Singapore - a segment of the workforce which he says is "exceptionally vulnerable" to economic restructuring.

Even with the various schemes already in place to support the retooling of workers, observers say that there is greater urgency now to tackle this issue as Singapore grapples with an ageing population and waning labour productivity.

This could mean more training grants to upgrade skills and additional resources directed at job matching could be announced during Budget 2019. A top-up of SkillsFuture credit is also due, while enhancements to the Professional Conversion Programme (PCP) and the Adapt and Grow initiative are also likely in the pipeline.

As of last count on 3 October 2018, 370,000 Singaporeans out of the 2.6 million eligible for SkillsFuture credits have used it to attend training courses.

The Adapt and Grow Initiative was rolled out in 2016 by Workforce Singapore (WSG) to help the Singaporean workforce transit into new job roles in growth sectors. About 30,000 jobseekers were placed into new jobs in 2018, up from 25,000 placed in 2017.

One of the programmes under WSG's Adapt and Grow initiative is the PCP, which targets mid-career PMETs to undergo skills conversion. More than 3,700 Singaporeans were placed through the PCP in 2017.

Lee Tiong Heng, Global Investment & Innovation Incentives Tax Leader, Deloitte Southeast Asia suggested that the government could consider introducing a "scaled-down version" of the Productivity and Innovation Credit (PIC) scheme, where businesses could be entitled to 200 per cent tax deductions on amounts spent on training to further support SMEs to send workers for training.

But with the government likely to announce new training incentives in the upcoming Budget 2019, observers raised concerns that this would lead to more issues.

Jay Huang, CEO of HR startup Pulsifi, observed: "Government schemes in part created a huge market of training providers, some of which are low quality with inflated prices, leading to low confidence in training being able to make any difference."

Instead, industry watchers say that policymakers should focus on making the current schemes more accessible for businesses instead of creating new ones.

SBF's Mr Ho noted that while there are many schemes out there, companies struggle to identify the most suitable ones to meet their needs. More awareness of the various initiatives out there is needed, he said.

One of the SBF SME Committee's recommendations for Budget 2019 calls for the development of "info-maps" of the government support schemes and grants to better help SMEs understand and leverage on the assistance available to transform and grow, he added.

Deloitte's Mr Lee proposed that more can also be done to ease the administrative burden for SMEs to apply for grants.

For example, he noted that the Business Grants Portal to date allows applicants to apply for four grants only, namely the Market Readiness Assistance and Enterprise Development grants, the Business Improvement Fund and the Productivity Solutions Grant.

He added that the qualifying criteria for these grants is also not easily found on the site.

"The goal should be to make it easy for the SMEs to go to the portal and make the application themselves, without incurring costs in engaging the help of professional services or consultancy firms," he said.

But aside from worker training, observers noted that more help should be given to companies to boost HR capabilities and plan further ahead for their manpower needs.

Martijn Schouten, Singapore People & Organisation Leader, PwC South East Asian Consulting, said: "Despite best intentions, we notice that many organisations, even large and mature ones, don't know how to approach upskilling."

"They are unable to leverage analytics and technology to predict which roles will be made redundant in the near future, what people in those roles could do in the future and how these people can be upskilled in the right way."

As business models and technologies evolve, he pointed out that companies now need better HR capabilities to identify skills gaps, anticipate needs, spot potential and build the workforce of the future.

He said: "Organisations can no longer afford to sit back and wait for society to produce the skilled talent they need to take the lead on reskilling."

"Organisations cannot necessarily protect jobs, but they can try their best to protect their people."