The Covid-19 pandemic will accelerate major structural changes to industries and job losses in vulnerable sectors, said Deputy Prime Minister Heng Swee Keat.
But the Government will support workers to upskill and companies to rethink their business models so that Singapore can overcome the crisis and emerge stronger.
In an interview with The Straits Times and The Business Times yesterday, Mr Heng, who is also Finance Minister, said the world is facing an unprecedented level of uncertainty, beyond what was seen during the global and Asian financial crises.
Because of the "very deep" cyclical shocks to global demand and supply, it is unclear what the shape of economic recovery will look like, he told ST associate editor Vikram Khanna, adding that it depends on how countries cope with significant and accelerated structural changes in three areas.
The first is innovation, as the pandemic forces companies to embark on telecommuting and e-commerce. It has also sparked developments in healthcare such as the development of vaccines and telemedicine, he said.
The second is globalisation. The Ricardian model of comparative advantage - where countries specialise in goods and services in which they are relatively more productive - may be less relevant in today's digital economy, he said, adding that the new pattern of globalisation will place a premium on not just efficiency and productivity, but also resilience and equity.
"You cannot have a globalisation process where big segments of the population feel that they have been left out, that their lives have not become better. And the politics that you're seeing in many of the advanced economies is a warning to all of us on how those changes are going to fracture society and fracture support for better specialisation of labour globally," he said.
The third major change is the future of work. With artificial intelligence and robots able to crunch algorithms and take over jobs done by humans, both high-touch services - such as retail store assistants - as well as managerial and professional jobs will be greatly impacted, Mr Heng said.
"We are going to see a significant reconfiguration of the labour market globally, the rise of the gig economy and freelancers - and this will cause significant stresses in many societies."
Mr Heng had said last month that the Government expects 100,000 jobs to be lost this year due to Covid-19.
Countries that prepare their people for change will be better positioned to seize new opportunities, he said. "There are some business models that will be broken. So if we don't pivot quickly to new growth areas, many businesses will be in trouble."
This is why the four Budgets to date focus not just on saving jobs, but also traineeships and skills upgrading, he added.
Under the Fortitude Budget announced on May 26, the Government will set aside about $2 billion under the SGUnited Jobs and Skills Package, which will create 40,000 jobs, 25,000 traineeships and 30,000 training opportunities - about 100,000 positions in total.
Mr Heng said that while change is difficult, Singapore had a head start with its industry transformation in 2016.
"When we started, there were some businesses who were in denial and said, 'Why do we change, what is this big thing that you are seeing?' But I'm glad that more and more are coming on board. During my last meeting with the Singapore Business Federation and Future Economy Council members, it was most encouraging to hear how business leaders are leading the charge for change."
Industry transformation maps (ITMs), which aim to raise productivity and develop skills, drive innovation and promote internationalisation, were launched across 23 sectors and six industry clusters from 2016.
The Future Economy Council, which includes representatives from the Government, unions, trade associations and industry, oversees the implementation of the ITMs, among other things.
Mr Heng stressed that business leaders play an important role in lifelong learning.
"It is no longer just about that buzzword, it has to be embraced deeply by everyone. And I want to make an appeal to the leaders in our companies. As leaders, they play the most critical role in any big change.
"The only way people can learn something and put it to good use is when this is aligned with the company's transformation - so that both workers and businesses see that they are aligned in the same direction, and achieving that synergy."
Could this crisis have a silver lining for Singapore - by accelerating transformation that was happening a bit too slowly?
"That has to be our mental attitude. When something hits us, we should not just sit and moan and groan," Mr Heng said.
"Rather, we should spring up and say: This is now a time for us to accelerate change. This is a time for us to spring up and embrace the change which can serve both the immediate needs of tackling Covid-19, and our longer-term needs."