Singapore's Productivity Drive
Apr. 17, 2015
Under the leadership of the late Prime Minister Lee Kuan Yew, Singapore flourished into one of the region's most successful economies. That's partly because it's been able to attract foreign investment, and foreign workers. But people have started to complain that living costs are rising too fast. They also say that infrastructure hasn't kept up, so the roads and trains are getting too crowded.
Government officials have been trying to get a handle on the situation. They've started limiting the number of foreign workers. It's part of an effort to shift the driver of the economy to productivity and skilled labor.
Yuko Fukushima reports on how people are adjusting.
The managers of a Chinese restaurant in Singapore's airport have found a new way to cut down on labor costs. They've automated the cooking process for fried rice and noodles. They say the machines have enabled them to cut 2 staff a day.
Managers of another restaurant are trying something even more unusual. They're sending food and drink by drone. The gadget is programmed to fly to a particular table. The managers are just testing it now. They're hoping to launch it officially in June.
Business owners across Singapore are thinking creatively to try to raise productivity and lower their staffing needs. They say in recent years they've been struggling to hire the workers they need.
5 years ago, the government began tightening restrictions on foreign labor, especially unskilled workers. The inflow of workers from abroad slowed dramatically and that's caused headaches for some managers. Lunch time means long lines for this salad bar. The owners rely on foreign labor and that's harder to come by these days. They've tried to plug the gap with local part timers, including housewives and retirees. But the head of recruitment says it's still tough.
Solachi Vellayan, who works at the salad bar, says "there are a lot of competitors in the industry, and they are giving different kinds of allowances and benefits. So people here had a lot of choice to select a company they wanted."
Government officials are listening. Their budget for this year includes support for small firms struggling with the tight labor market. They may also hold off on plans to tighten foreign worker levies, at least for now. But the government says it remains determined to raise productivity. The government believes boosting productivity will help to address the labor shortage. It's set a target of a 2-to-3% increase over the next 4 years.
Singapore's electric power company is also turning to technology to speed up the workflow. Maintenance workers swapped bundles of papers for tablet computers and it had a dramatic effect on their efficiency. Now managers want to introduce smart glasses. The workers will be able to communicate directly with experts in the office and receive instructions while they work.
The managers say the hands-free gadget should make workers even more efficient. One of them, Peter Leong, says "We've just started a 4-month trial. If that's bringing lots of benefits, we'll use it for a year."
The construction industry has been hit particularly hard by the restrictions on foreign workers. Last month a team of officials from the Building and Construction Authority flew to Japan to study the latest construction technology. It's part of a government plan to make the industry more efficient. Leaders have earmarked 330 million dollars over the next three years for the effort. The team wanted to see how Japanese companies build steel-frame skyscrapers, and bring the techniques back home. Chew Keat Chuan from the authority says the construction techniques will lead to higher productivity.
The government is trying to figure out how to cap the number of foreign workers, without limiting development. In the meantime, Singapore's business owners know they have to innovate to stay competitive in such a tight labor market.
Our anchors ask Yuko Fukushima to explain the challenges facing the government as it attempts to streamline productivity and propel Singaporean society into the future.
Beppu: So the leaders are under pressure to stop foreign labour pouring in, and they are trying to hire more locals.
Fukushima: Young Singaporeans are getting picky. They aren't clamoring for the labor intensive jobs in areas like food, retail or construction. The government wants to offset the labor shortage by raising productivity but it hasn't been too successful so far. Last year, productivity actually fell.
Shibuya: How is the government trying to boost productivity?
Fukushima: That's what I asked Dr Beh Swan Gin, the head of the Economic Development Board. That's the government organization that plans growth strategies.
Beh Swan Gin / Chairman, EDB says "the shift that we hope to see is the shift from an investment-centered economic growth to one that's innovation driven. And that innovation will come from invest and R&D. And as a country we have invested enormously in making sure that our public sector scientific capabilities in the universities, in our research institutes that our funded by the government, that these capabilities are present, so that companies can tap onto this to power their own R&D, their product development, so that they can then generate the sort of products and services that can address the market opportunities."
Beppu: Can Singapore restructure its economy to focus on productivity and skilled labor?
Fukushima: Well, it may be a rough road ahead. With the founding leader gone and an aging society, the labor market is going to get tighter and tighter. But the EDB Chairman says the leaders aren't trying to get rid of foreign workers... They're just trying to find a better balance.
Beh Swan Gin / Chairman, EDB says, "the misunderstanding is that Singapore is closing its door. And that's not true at all. In fact, we continue to be welcoming to foreigners who wish to be part of Singapore, be part of Team Singapore we call it, to work in Singapore, whether in the local companies or in the international companies. The difference is the pace of entry, the pace of flow that I think Singapore has struggled with. And that's what we're trying to calibrate, to make sure that is taking place at a much more manageable pace and that we make greater efforts to integrate as well foreigners who are living in Singapore, who are making Singapore their home."
Fukushima: People in Singapore will be reflecting this year on their success story, as they celebrate their 50 years of independence. But Singapore's leaders know they've got to adjust their growth model if they want to stay successful.