Budget 2015 - Different takes on productivity debate. MPs point out high employment rates, magnitude of restructuring task

Wednesday, 4 March 2015

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Different takes on productivity debate. 

MPs point out high employment rates, magnitude of restructuring task

Published on Mar 4, 2015 1:20 AM

By Chia Yan Min

SINGAPORE'S restructuring efforts may be lagging in tangible productivity gains so far, but employment and labour force participation rates have reached record levels, and this is to be celebrated, said Ms Foo Mee Har (West Coast GRC).

She was among at least eight Members of Parliament who gave a different take on the issue and offered a slew of suggestions on ways to lift productivity as the Budget debate yesterday tackled one of the country's most pressing economic problems.

The Government has set a target of an annual 2 per cent to 3 per cent productivity growth over a 10-year period to 2019.

But last year, productivity actually contracted 0.8 per cent, following a 0.3 per cent rise in 2013.

Most advanced economies have raised productivity by reducing overall employment, said Ms Foo.

In contrast, Singapore has created more jobs and opportunities for its citizens, largely by increasing the participation of older workers and women in domestically oriented sectors that have been laggards in productivity growth.

This might have hit productivity levels, but creating employment opportunities for Singaporeans who would otherwise remain economically inactive "is in itself a noble social objective worth pursuing", she added.

"Perhaps we should include growth targets in employment rates and labour participation rates as stated outcomes of our restructuring efforts, as these clearly have a positive impact on household incomes and standards of living," she said.

Nominated MP and labour economist Randolph Tan also offered an alternative perspective on the productivity debate. Some economists say Singapore's productivity targets are too ambitious, but Dr Tan believes the goals "are not unreasonable".

While there has been a tendency to blame manpower policies directly for the lack of progress in productivity, "this is unfair, and we should instead consider the magnitude of the restructuring task Singapore has embarked upon".

He noted that last year was likely to be the first non-recession year in a decade that the pool of foreign labour grew slower than that of local manpower. This is a "huge" change, and more time will be needed for the economy to adapt.

Dr Tan called for patience, and said the timeframe for meeting the labour productivity target should extend beyond the current decade.

While the focus has been on helping small and medium-sized enterprises (SMEs) raise productivity,
 Mr Liang Eng Hwa (Holland-Bukit Timah GRC) said large companies also deserve attention.

There will come a point when the marginal productivity gains that SMEs can "squeeze out" will be less than the marginal effort put in, said Mr Liang, who added that many SMEs are "down to bare bones" in trying to boost productivity.

"Larger companies are better positioned to bear the costs of trial and error as they find the right innovative change to make. Once the large companies move, the whole industry moves, because competition will compel them to do so," he said.

Mr Liang, who is the chairman of the Government Parliamentary Committee for Finance as well as Trade and Industry, also said more publicly available data can help businesses work smarter, in line with the Government's Smart Nation initiative.

Nominated MP Thomas Chua, who is the president of the Singapore Chinese Chamber of Commerce and Industry, called on the Government to appoint a single authority to help local enterprises, particularly SMEs.

This would "improve effectiveness (and execution)" of the Government's policies, he said.

Labour MPs said unions and companies can work together to create better jobs and workplaces.

Mr Heng Chee How (Whampoa), NTUC's deputy secretary- general, said more needs to be done in job and process redesign.

Mr Yeo Guat Kwang (Ang Mo Kio GRC) added that instead of complex fixes, it is more important for SMEs to eliminate redundancies and bottlenecks through the innovative use of technology.

chiaym@sph.com.sg