SINGAPORE: It has been one of the worst recessions Singapore has faced since independence and the nation has taken several approaches to tackle it.
The government, employers and workers have made a collective effort to cut costs and save jobs. And for the first time, Singapore has drawn on its past reserves to fund a major resilience package.
The economic downturn started in the middle of 2008 and the economic situation worsened as it spilled over into the new year. The government responded by bringing the Budget forward to January 2009, announcing a S$20 billion resilience package.
Liang Eng Hwa, deputy chair, Government Parliamentary Committee (Finance and Trade and Industry), said: “We need to build more resilience in the economy so that in the event there is another downturn of this magnitude, Singapore will not be that badly affected. Secondly, this crisis also drives home the point that we need to maintain high reserves and have a strong fiscal position.”
With the use of past reserves, the Jobs Credit scheme was launched to help companies reduce labour costs and save jobs through cash grants. The scheme has been extended for six months till June 2010.
More than S$3.6 billion of Jobs Credit would have been paid out by the government after its fourth payment on December 24. Another two, stepped-down payments in March and June 2010 will cost the government another S$675 million.
“The six months, hopefully, will be helpful to companies as they start to build new orders for the businesses, find new markets and if need be, further restructure the business so that they can stay viable for the long term,” said Mr Liang.
Minister in the Prime Minister’s Office and NTUC’s secretary-general, Lim Swee Say, said: “For Singapore, we are already looking beyond Jobs Credit because we know Jobs Credit is not here to stay. So the tripartite partners are now working very closely… asking ourselves how we can be cheaper, better and faster.
“Being cheaper means enhancing our productivity so that every piece of equipment and worker can produce more output, so that we can reduce the costs of doing business and enhance our competitiveness.
“The good news is that many countries are thinking along the same way, but in Singapore, we are one step ahead of them. That’s because the trust and unity among the tripartite partners during the downturn were not weakened but in fact, further strengthened. As a result, come 2010, the tripartite partners are able to run together, ahead of the competition elsewhere.”
The Economic Strategies Committee was formed earlier this year to focus on developing and recommending strategies to grow Singapore’s future as a leading global city in the heart of Asia. Its report is expected to be released at the end of January 2010.
Mr Liang said: “I have spoken to many business people and they have told me that they prefer to have a more steady growth, even though the growth may be at a lower rate, as opposed to high growth where there will be volatility.
“Businesses want to have some stability and certainty so that they can plan for the longer term. Excessive volatility tends to attract a risk premium to the business and thereby increasing overall costs.
“I would hope that the next phase of growth would be smart growth. In the last three to four years, we have seen strong growth in our economy. While it is good to have strong growth, it has also caused other problems. We have seen bottlenecks in certain segments of the economy, we have seen costs risen and that has led to inflationary pressures, eroding our competitiveness.
“I think we have to be careful where our bottlenecks and constraints are, and identify our comparative advantages, play on our niches so that we can have targeted growth where there is potential.”
Also witnessing its fair share of ups and downs is Singapore’s labour market, which has seen some improvements in the past few months.
Even though Singapore’s economy appears to be recovering, the Ministry of Manpower said it will take some time before its employment situation stabilises.
Manpower Minister Gan Kim Yong said: “One main reason is that many of the employers have held on to excess workers in the recession because of the various measures we have put in. Therefore, as the economy recovers, many of these employers will tap on the excess manpower and capacity that they have before they start to expand and recruit new workers.
“Recruitment and employment opportunities will typically lag behind economic recovery and therefore it is important for us to take that into account while the economy recovers. Over the next twelve months, we expect the employment market to remain more or less stable, but we do not see a massive recovery of the employment market.
“It is important for us to continue to help workers who are affected as it will take some time for them to get back to the job market. It is important for us to continue to train them and give them skills.
“It is also important to remember that many of the new opportunities that are coming along after the recovery will be new investments and they will have new skill sets. So we have to prepare our workers, train them and upgrade them so that they will be able to tap the new opportunities.”
Asked about some of his key concerns for workers as Singapore recovers from the global downturn, Mr Gan explained that he is always worried about the employment of workers.
He said: “At the moment, we have some 20,000 jobs which are immediately available on our database. We have 14,000 job-seekers on our register and this has come down significantly from the peak.
“Theoretically, they should match each other and we should have excess jobs short of workers. But we could not match them because of a variety of reasons. Skills mismatch is one – therefore training is one – and expectation is another factor.
“We need to send some of these workers for career counselling so that they would have a realistic expectation as to what kind of jobs they can do. It is also important to enhance their basic employability skills.
“Some of them have not worked in a big company before, so interpersonal skills, how to deal with your superior and peers are important employment skills… We have done much better in this recession than in the previous one because we have paid a lot of attention to helping the workers prepare themselves for employment rather than just simply job matching.”
For 2010, Singapore’s Trade and Industry Ministry has forecast economic growth of between 3 and 5 per cent.
Hi. I find this distasteful and i’m surprised that a renowned MNC can do things like this. Very unacceptable indeed!