Labour crunch: Better to fine tune than U-turn

Labour crunch: Better to fine tune than U-turn

SINGAPORE - As Singapore seeks to manage foreign worker growth, adapting policy to real outcomes will sidestep the need for big changes in the long run that could significantly disrupt the economy, Deputy Prime Minister Tharman Shanmugaratnam said.

"It is better to be clear on our long term strategy, avoid any U-turn, but to adapt and refine policy depending on actual foreign worker growth outcomes along the way," he said at the Business Excellence Awards last night. "This is the better way over time, because it provides a degree of certainty over directions whilst avoiding major changes down the road that could lead to significant disruption in the economy."

On the other hand, announcing policies five to eight years in advance and then locking them in for that whole period could create further uncertainty for businesses in the long run as it may require even more drastic changes if outcomes are found to be off the mark, he highlighted.

The long-term strategy in question is keeping the number of foreign workers from growing beyond one-third of the overall workforce on a continuing basis this decade.

Companies and business chambers, however, have voiced the need for greater clarity, as opposed to having changes being introduced piecemeal.

Acknowledging that companies are concerned about the future, Mr Tharman pointed out that while the government has set levies and tweaked the dependency ratio ceiling (DRCs), companies can still hire in accordance with their own needs, as long as they pay the levies and stay within the DRC cap by attracting more locals.

"It means we cannot tell in advance exactly how many workers we will bring in. Instead, if we find that companies are bringing in more foreign workers than anticipated, and the growth of foreign workforce is too rapid, we will have to tighten further," he added.

In his speech, he said that companies had to adjust to the new normal - a permanently tight labour market - by raising productivity.

And while the government is striving to help businesses restructure and grow by providing broad-based support, it must also let market forces thrive.

"We must allow market forces to restructure our economy, even if it involves some pain, so that the more innovative and efficient enterprises have more room to grow."

He noted that businesses which innovate and adopt better management practices tend to outperform their peers.

According to a Business Excellence (BE) Impact Study conducted by the National University of Singapore Business School, these companies registered 11.5 per cent higher labour productivity - in terms of value-added per worker - while their profit margin was 13.5 per cent higher versus industry competitors.

The study polled some 220 private sector organisations which have received BE Awards and BE certifications, looking at their productivity, financial performance and investments towards best practices between 2008 and 2011.

Similarly, a one per cent increase in productivity growth translated to a 6 per cent boost in operating profit and a 2 per cent increase in revenue growth.

Such companies scored high on customer satisfaction, while staff tended to be paid higher wages than the industry average.

It was also announced last Tuesday that Workforce Development Agency (WDA) and Spring Singapore are working together on a new initiative to create a pool of productivity consultants for different sectors.

These consultants will review companies' processes and recommend areas for improvement to help companies drive productivity.

Meanwhile, two public sector organisations and one company walked away with honours at the Business Excellence Awards that was held at the Shangri-La Hotel on that night.

Singapore Prison Service (SPS) was awarded the Singapore Quality Award (SQA) with Special Commendation, while the SQA winners were Singapore Customs and Wing Tai Retail, which was the first retailer to win the SQA.

The three were chosen for achieving productivity improvements and enhancing operations through the adoption of good systems and practices.

For instance, SPS, which has been recognised for operating a progressive, secure prison system, also champions the Yellow Ribbon Project which helps former convicts integrated back into society.

"Each year, we see more organisations coming onboard the Business Excellence journey," said Cham Tao Soon, chairman of the SQA governing council. "They have experienced continuous learning and innovation that helps them improve their performance and enhance their competitiveness."

Over 800 organisations employing about 20 per cent of the nation's workforce have adopted the BE framework to date.

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