Nov 3, 2012

Singapore - Singapore's job growth could moderate to between 1.5% and 2%

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SINGAPORE: Acting Manpower Minister Tan Chuan-Jin on Friday said job growth in Singapore could moderate to between 1.5 and 2 per cent.

He called on firms to seize opportunities to embrace productivity measures, even as the government tightens foreign manpower flows.

Mr Tan, who is also Senior Minister of State for National Development, said a mindset change on the part of businesses is needed so that the economy can be restructured.

The Cube 8 condominium along Thomson Road is built with a productivity-centric focus.

Dry walls are used instead of brick-layered ones, so construction is done two times faster.

Much work is completed through prefabrication, where building parts are assembled in factories off-site.

Thierry Brezac, projects director of Dragages Singapore, the main contractor of the Cube 8 condominium, said: "We have done a calculation in terms of manpower savings, and we estimate that for this particular project, with the implementation of all these features, we can save about 30 per cent of the manpower."

With less reliance on foreign manpower, it shows how a firm can re-design its processes to improve productivity.

Mr Tan said Singapore is in a good position for economic restructuring, being in a region of growth, despite the slowdown elsewhere.

He said firms cannot rely on free-flowing access to foreign workers as before, since the government does not intend to return to the days when this was possible.

And while the authorities cannot mandate productivity-driven measures, they can try to shape the environment with incentives to encourage the adoption of such measures.

Mr Tan said: "People are looking at expanding their businesses, so that allows us to actually, perhaps transform the economy in a much more productive way - going up the value chain and yet trying to maintain employment numbers where it is, so that Singaporeans continue to have good jobs. You will have transitions, so as companies restructure, there will be more redundancies."

And the government will help in the transition process, with skills upgrading and job matching initiatives, so workers can flow from a less productive sector to a more productive one.

Meanwhile, economists have said the pace of inflow of foreign manpower has to depend on the external environment and be in tandem with global business cycles.

They also believe how fast the inflow of foreign workers is calibrated depends on how quickly productivity can be improved.

Economists said that while government policies may set the tone, the pace of growth will be determined by market forces.

Professor Tan Khee Giap, co-director of the Asia Competitiveness Institute at the Lee Kuan Yew School of Public Policy, said: "We have to be very careful when we calibrate the employment growth or how many foreign workers we want to have.

"Now, we may think it's too many. So we start to control. You never know, next year the economy will be so bad that businesses will not be applying for foreign workers. Then the problems disappear. So, at which point you come in to control the foreign workers is very much subjected to the performance of the economy."

The slowing down of job growth is partly due to the government's structural shift. It is also another indication that there is no U-turn in the government's foreign manpower policy. But economists said the pace of the tightening measures can be slower.

Leong Wai Ho, regional economist at Barclays, said: "Maybe we can adjust the pace during the downturn, times like now, to accommodate a little bit more flexibility, not U-turning but to accommodate, where possible, a bit more flexibility, so that the cost squeeze is not so acutely felt and then when times are better, I think that will be the time to send more clearer signals that we intend to tighten a bit faster to make up for lost ground."

In the short run, analysts said the slower job growth will hit smaller businesses harder.

But they expect small and medium-sized enterprises to bounce back and raise productivity, with support from the government.

- CNA/ms

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