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Why It Matters

Whet appetite for innovation

If the humble coffee shop can be transformed by using the latest technology, then other industries are bound to be inspired too.

That was part of the thinking behind the choice of food services as the first of 23 key sectors to have its Industry Transformation Map launched last week.

The $4.5 billion industry transformation programme was announced in this year's Budget to help businesses tackle manpower challenges.

Food services firms employ 4.5 per cent of the workforce - or about 160,000 staff - but contribute just 0.8 per cent to the local economy. The manpower situation is changing fast. The sector's workforce grew 6 per cent a year on average from 2010 to 2014, but this growth is "a thing of the past", says Deputy Prime Minister Tharman Shanmugaratnam.

Older Singaporeans are retiring, while younger people's aspirations are changing. And the Republic cannot continue to expand the use of foreign manpower. So how can food services tackle this inescapable lack of manpower growth?

Companies must innovate and adopt technology at a quicker pace, says Spring Singapore, the lead agency in transforming this sector. Only 15 per cent have adopted digital service solutions, and the agency is offering time-limited grant support for initiatives in areas like kitchen automation.

Consumers, though, may need to get their heads around some significant changes. In the coming years, we may expect to consume more ready-to-eat meals and patronise food vending machines or even a new type of "productive coffee shop" with digital ordering or cashless payment options.

Spring aims to achieve productivity growth of 2 per cent a year over the next five years for the sector, up from a compound annual growth rate of 1.3 per cent in recent years.

Perhaps not all Singaporeans will take kindly to changes in the way they order their morning coffee. But these are both necessary, given the staff shortage, and good for firms and workers. Firms may get help to innovate and internationalise, and staff may enjoy re-designed jobs with better wages.

A version of this article appeared in the print edition of The Straits Times on September 12, 2016, with the headline 'Whet appetite for innovation'. Print Edition | Subscribe