Challenges Facing Singapore’s Workforce in the Future
Singapore is a small island city state in South East Asia with an area of approximately 648 km2. Despite the inherent disadvantages of a small domestic economy and lack of natural resources, Singapore has established itself as one of the top trading nations in the world, and is consistently voted as one of the best business destinations. It is also recognized as one of the most competitive economies in the world, supported by an increasingly competitive workforce.
However, will this trend continue?
Singapore has a clear advantage in multiple sectors, among them the industrial and service sectors. But the competition is closing in, and none of them very far away. Perhaps this is the problem with being on top of a hill, because everywhere you look, it’s all downhill. This is among the main challenges faced by Singapore’s workforce in the future.
Singapore advanced through its industrial-based economy and now its focus on k-economy, with special emphasis on value-added services. But now, look at China and India. Their rapidly booming economies will eclipse that of Singapore’s if Singapore does not substantially expand its investments and efforts in growing the capabilities of its people. Skills upgrading, although not new to Singapore, is still extremely essential if Singapore intends to continue climbing the value ladder. China is already the world’s second largest economy, accounting for close to 12% of all world economic activity. In fact, many analysts have suggested that the only real long term competitor to China is India itself, despite lagging behind a few years.
One thing that can be said is that China still has a high illiteracy rate, but the number of those literate and capable already surpasses that of Singapore. Another is the fact that Information Technology (IT), among the core fields in the New Economy, is mainly being outsourced to countries other than Singapore, such as India. Even though Singapore is developing the field of biotechnology as its “Fourth Pillar”, its efforts are still insufficient to match other larger countries such as Japan and the United States.
An aspect that has caught everyone’s attention is the high operating costs related with Singapore, in particular the high cost of labour in Singapore. Companies such as BMW, BHP Steel and Philips Luminaire have relocated their regional headquarters from Singapore to Kuala Lumpur not too long ago. Philips explained, “Kuala Lumpur offers lower cost, excellent infrastructure and a highly trained workforce.” Both the second and third Singapore has, but what Singapore lacks is the first. Hence, Singapore offers increasingly less value for money as labour costs rise in comparison with other regional countries.
Let us now examine one workforce challenge that is faced by nearly every country worldwide, but is still very relevant to Singapore. The volatility in the Singaporean employment market due to the rapid pace of globalisation. Those more likely affected are the lower skilled and aging workers. They are coming under pressure from workers from lower cost regional countries with the same qualifications such as Malaysia and Thailand. Take for example the manufacturing investments which EDB had secured for the first 6 months of 1998. A total of 10,500 technical jobs were created, but there was a lack of skilled workers for these jobs even then.
Now, Singapore is once again at the point of an extremely critical transformation. From an industrial, input-driven economy, Singapore will now have to take the big leap to become a knowledge-based, innovation-driven economy. We need to make this leap if we are to be an advanced economy, which we are not yet. We will need to re-double our efforts to attain the productivity levels of the US – the world leaders in productivity.
The difficult economic landscape – highly volatile, uncertain and intensely competitive – makes this transition doubly difficult. However, having completed the first lap of development over the last two decades, but we must now, together, run the next lap, to be an innovation-driven economy. It will take time and there will be some crashing of gears as we step up to the next level of competition. But it is crucial that we take decisive and determined steps to make these changes for our future prosperity and not rest on our past laurels.