Policymakers face a tough juggling act

Policymakers face a tough juggling act

SINGAPORE - Singapore's policymakers face conflicting challenges in the year ahead, participants at the 18th Singapore Economic Roundtable agreed.

More debatable though, was the extent to which rising business costs and a stronger Singapore dollar might hurt the economy's competitiveness.

"There is a short-term conflict between the authorities' desire to manage inflation over time and the strategy to encourage tightness in the labour market in order to achieve structurally increased productivity and incomes," said Edward Teather, economist at UBS Investment Research, a speaker at the twice-yearly conference last week.

The government's policy effort on the labour market "is far from complete", he added.

Mr Teather explained that despite lacklustre GDP growth, Singapore's labour market has stayed buoyant.

Employment growth in Q3 was an estimated 3.8 per cent year-on-year, far above the pace of output growth.

It is also close to multi-year averages and at the high-end of employment growth in other small economies globally such as Malaysia, New Zealand and Hong Kong over the past three decades.

"Singapore's supply of labour is not yet tight on an international scale," Mr Teather said.

Also, recent comments from the government suggest that the rising number of foreigners entering Singapore on S-passes, issued to mid-level workers earning at least $2,000 a month, may prompt further tightening of the rules in 2013.

Mr Teather points out that the government's targets and rhetoric imply that 2 per cent employment growth should be the norm for Singapore.

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