Economic Strategy Review makes a case not just for staying the course, but also knowing when to quit

[SINGAPORE] Everyone likes a good story about success that comes from staying the course. Singapore’s new economic strategy, however, also requires appreciation for knowing when to change course – or stop altogether.

For companies, this may mean restructuring, pivoting or even closing down; for workers, this may mean not just retraining, but also accepting a lower salary.

Last week, the final recommendations of the Economic Strategy Review (ESR) were released, with 32 proposals under eight broad thrusts. These were informed by three “strategic imperatives” – one of which is to become more agile and adaptable.

As Deputy Prime Minister Gan Kim Yong put it at the launch of the recommendations: “Agility also means accepting that renewal is part of a healthy economy.”

Enterprises are accustomed to asking for help to grow, thrive or even just survive. The government will, of course, continue to provide this. But it also wants to help companies recognise when it is time to “give up”, whether by changing one’s business or closing it.

Or, as more gently phrased in one of the 32 recommendations: Government support should “go beyond helping businesses grow” and “help firms assess their position early and pursue suitable transition pathways”.

All this is in the name of freeing up capital, people and resources for “more productive uses”.

As Acting Transport Minister Jeffrey Siow said at the same event: “An economy is healthy not because firms never fail, but because new ones keep rising.”

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Allowing failing businesses to fade away may make sense from a hard-headed economic perspective, but can also seem hard-hearted.

When manufacturing operations are moved overseas, or yet another food and beverage business goes under, there are real human costs, measured in lost jobs and broken dreams.

The workers “freed up” by such changes may not always relish their newfound freedom.

Beyond policies that make exits easier, Singapore needs a mindset change that makes them more acceptable.

A business closure should not always be seen as an occasion for mourning. Businessmen should be lauded not just for perseverance, but knowing when to cut their losses, too.

It is difficult, of course, because more is at stake than pride. This is true for both businesses suffering losses and workers who lose their roles.

Easing the loss

The latter group – workers who have to change roles – is the focus of another ESR recommendation: strengthening transition support for professionals, managers and executives (PMEs).

This goes beyond the usual exhortations to retrain. Rather, the report clearly states that some workers will lose income when they transition, and recommends finding ways to smoothen this loss.

In other words, the government cannot promise that everyone will make it through this transition unscathed; nor is it offering that false hope.

Despite reskilling and retraining, some PMEs will simply have to switch to lower-paying jobs, as has been the case in past disruptions.

What the government can do is to soften this transition, perhaps by providing temporary financial support to bridge the income gap. Workers themselves will have to recognise whether and when this harsh reality applies to them.