Why It Matters

Blow to drive for productivity

The latest half-yearly labour market statistics released on Tuesday were another blow to Singapore's ongoing productivity drive.

Labour productivity remained stuck in reverse gear for the third consecutive six-month period since last year. It saw a 0.5 per cent dip for January to June this year, falling in all sectors including manufacturing, construction and services.

The Ministry of Manpower has conceded that "productivity growth is not likely to see a significant uplift this year". It is not the first time the productivity drive has sputtered.

In 2010, Singapore set an ambitious target of 2 per cent to 3 per cent productivity growth for each year between 2010 and 2019. Productivity rose in 2010, 2011 and 2013, but fell in 2012 and last year. At the rate now, Singapore is not likely to hit the 2010 target.

Several ongoing efforts by the Government, employers and unions will decide if the productivity push succeeds.

Small and medium-sized enterprises, which employ about seven in 10 workers in the workforce, form the weakest link. They are getting the most attention in terms of government help, like grants.

Automation is also key. Machines allow firms to raise output without adding manpower. Restaurants have seen promising results by using computers to take orders and robots to cook.

Above all, workers' training remains the most vital. Besides company and industry-based training, the new SkillsFuture Credit scheme that gives every Singaporean aged 25 and above $500 to attend training classes puts the responsibility on workers to upgrade their skills.

Hopefully, with these measures, we can see productivity inching up in the next few years.

Workers power the economy. If we cannot raise labour productivity as the ranks of new Singaporeans entering the workforce start to thin in the second part of this decade, the economy can stall.

In this sense, time is running out.

A version of this article appeared in the print edition of The Straits Times on September 18, 2015, with the headline 'Blow to drive for productivity'. Print Edition | Subscribe