Sunday, 13 August 2017

The Singapore Labour Force - Getting ahead of the curve

By Devadas Krishnadas and Elena Lopez, Published TODAY, 12 Aug 2017

The “Labour Force in Singapore 2016” report released by the Manpower Research and Statistics Department reinforces the perception that the Singapore labour force is facing long-term pressure to transform its skill base.


The employment rate for residents has decreased amid anaemic economic growth and a modest increase in supply of foreign workforce. The nominal median monthly income (including employer contributions to the Central Provident Fund) of full-time employed residents is rising at a slower pace while the education profile of the labour force has been improving over the years.

The number of Singapore residents with a degree, diploma or other types of higher education qualification has increased to over half the resident population, higher than the average for Organisation for Economic Cooperation and Development member states and also higher than that in South Korea (45 per cent), and the United States (44 per cent).

The occupational distribution amongst employed residents reflects the continued shift to a services concentrated economy – more than half are Professionals, Managers, Executives and Technicians, with most concentrated in information and communications, professional services and financial and insurance services.

At the same time, training participation rate has edged up, resuming the uptrend after a moderate drop in the previous year. This rate was higher in the services industry than the national average. The resident unemployment rate continued to rise for the fourth consecutive year, reaching 3 per cent in 2016. Unemployment was highest in the information and communications, and accommodation and food services sectors. Worryingly, job seekers are taking longer to find jobs. The proportion of unemployed residents still looking for work after six months rose to 20 per cent in 2016.


An uncertain outlook for global economic growth, characterised by geopolitical uncertainties, sluggish performance in advanced economies toggled with unresolved debt-crisis in the Eurozone, continue to dampen sentiments. This has impacted external demand for the Singapore economy. The Singapore economy is impacted by both cyclical and structural factors.

Cyclical factors are clearly visible. Companies are slowing down hiring because they are affected significantly by the weak external and internal demand. Clear examples can be found in the oil and gas, marine and banking and finance sectors that have the highest number of layoffs in 2016. The structural factors are long-term factors underlining seasonal and cyclical effects. Technology change is the most significant structural factor at play. It is disrupting industries from financial services, ride hire, to hospitality and professional services.

The labour force needs to adapt to the rapidly changing economic climate. The changing climate is rendering skills obsolete while creating demand for new skills and capabilities at a higher frequency.

New knowledge and skill sets lead to the creation of new types of jobs. Knowledge of cloud and distributed computing, statistical analysis and data mining, web architecture and development, network and information security are now in-demand skills. This has led to the creation of Data Science as a fast growing field.

However, these new occupations have high knowledge and skill barriers to entry. This makes it difficult for older workers to retool to fit in. Thus, in aggregate terms, technology change may mean jobless economic growth.

This would have profound economic, social and political consequences. Early action to address this potential phenomena and sustained industry and government intervention to support and re-skill workers are necessary to avoid ripple effects which threaten social stability and capital-labour relations.

Relevance to the economy will demand ever higher levels of both hard and soft skills. The labour force needs to learn relevant skills to add value to the economy and to contribute to industry transformation; thereby joining the changing trend instead of resisting it. Industries must transform to adapt themselves to new market needs, seize new technological advances and offer attractive opportunities to workers who accept the challenge of change.


Ensuring economic competitiveness has always been a priority for the Singapore Government. It has consistently allocated policy and fiscal support to strengthen the profile of the local workforce and sector competitiveness with investments in technology and infrastructure.

National policies and initiatives have included tax releases, financial schemes, educational training and business consultancies in order to encourage and facilitate Singaporeans to acquire deep skills and expertise. Specifically, recent examples include sectoral manpower plans, SkillsFuture Credit scheme, Professional Conversion Programme and Career Support Programme.

The complexity of the job market requires long-term tailored plans to help workers and enterprises adjust to change and focus on the relevance and quality of training. This is a two-step process of first identifying the direction and skills for the future and second, designing targeted interventions to support industry and labour force transformation.

The long-awaited report by the Committee for the Future Economy (CFE), released in February 2017, was poorly received by industry. It was characterised by high level statements but an absence of practical details and a seeming lack of appreciation of the inherent difficulty in overcoming skill barriers and managing the transformation of an ageing labour force.

However, the CFE indicated that it has initiated 23 sectoral transformation initiatives. These are expected to provide more granular clarity on the sector strategy and associated programme level support. It will be imperative that these sectoral plans are focused, practical and achievable and come with the assurance that government support will be both targeted and adequate.

Alongside these sectoral plans is the urgent need to develop a comprehensive perspective on the digital future. We are already in an age which is not only driven by accelerating digitisation but is being defined by it. Rather than take a piecemeal, app by app, approach to making sense of this phenomenon, it is crucial to work from first principles.

Significant and sustained policy support and investments in technology infrastructure and capacity for educational and political reform will be required to “re-wire”, not just retool, the economy from Lee Kuan Yew’s “digit” economy, where disciplined but docile workers were the key, to a digital economy where creativity, flexibility, innovation and resilience will be determinative.

Getting ahead of the curve must therefore mean more than strategies but mind-set and emotional re-setting on the part of the labour force. The re-set will be difficult but unavoidable. The pain factor from economic disruption must be allowed to stimulate workers to take the initiative. The Government must manage the difficult balancing act between providing support without masking this natural stimulus. Succeeding will call for more than economic judgement but will require reserves of political courage and capital.

The irony in the Singapore case would be if the Government proves capable of conceiving a compelling strategy and providing suitable support but the labour force proves unable to bring itself to make the transformation due to complacency.

ABOUT THE AUTHORS: Devadas Krishnadas is chief executive of Future-Moves Group (FMG), an international strategic consultancy and executive education provider based in Singapore, and Elena Lopez is an economist at FMG.


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