SINGAPORE - The rate of job creation may be halved as Singapore moves to grow its economy through a more productive workforce, said labour chief Lim Swee Say yesterday.
In fact, the government wants to see jobs created at the rate of 2 per cent or less per year from 4 per cent yearly over the last decade, said Mr Lim, who is also Minister in the Prime Minister's Office. The cut in job creation is a "new reality" that companies must adapt to.
Said Mr Lim: "If we were to continue that rate of growth of 4 per cent a year, come 2020 we can expect to see a workforce of more than four million, and it could be as high as 4.5 million. It's very obvious that that rate of growth is not sustainable, both from the economic angle as well as the social angle."
In short, the days of strong job creation with over 100,000 jobs added a year "is not going to happen too often in the future", said Mr Lim.
Instead, Singapore must expect job growth to stabilise at between 65,000 and 75,000 a year over the next decade, which is a more "sustainable growth" rate.
"Keep driving our economic growth through workforce growth means eventually, we will become uncompetitive because you keep growing by having more workers and not by having higher productivity."
Mr Lim's comments come a day after the Ministry of Manpower released preliminary estimates that showed a slowdown in jobs created from July to September this year to 24,900 compared with 31,900 during the same period last year - which saw a total of 120,000 jobs added.
While part of the drop can be attributed to global economic conditions, a larger factor at play is the structural policy changes that Singapore is undertaking to raise productivity, said Mr Lim.
"Is this new reality a better one for the Singapore economy and the Singapore workforce? I think the answer is, it depends," acknowledged Mr Lim.
"If we get it wrong, this slower growth in the workforce will firstly translate into higher structural unemployment . . . and we will see a growing mismatch between job seekers and job supply."
There will also be two other downsides: lower economic growth rates and lower wage increases.
But these need not be the outcomes, said Mr Lim.
"We believe that if we get it right, then the set of outcomes will be even more positive than what we have today in Singapore. To minimise structural unemployment, the solution is skills upgrading.
Get it right, upgrade the skills of the workers, keep them up-to-date, multi-skill them, make them more flexible, more adaptable, and we can overcome that potential downside of structural unemployment."
He believes that the economy can still grow by 3.5-4.5 per cent a year if the entire workforce, growing at a rate of less than 2 per cent, makes productivity gains of 2-3 per cent.
And importantly, with a better-skilled workforce, Singapore will then be able to sustain its real wage increases, he said.
"We should strive for a more skilful workforce, a more productive economy and at the same time more sustainable growth in the Singapore economy."
It will not be easy, he said, but it can be done.
"It can be done if we all apply our minds together. All of us are going to come under tremendous pressure . . . but instead of hoping that one day the government will take a U-turn in its policy, which is not going to happen, we should apply our minds and ask ourselves, how can we reposition our industries, our enterprises, together?
"Those who are able to respond better and faster will be able to continue to stay ahead."
Mr Lim was speaking at a sharing session organised by Spring Singapore and the Jumbo Group of restaurants, during which the eatery showcased its productivity initiatives. It was attended by 110 representatives across the various service-related sectors, including the F&B, retail and hospitality.