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SINGAPORE: The government's Economic Strategies Committee (ESC) has released its report aimed at ensuring long-term growth for Singapore, spelling out broad strategies to raise innovation and productivity.
It said that average productivity growth of 2 per cent to 3 per cent per year can be achieved over the next decade, adding that achieving such a productivity rate would allow gross domestic product to grow by between 3 per cent and 5 per cent per year in that period.
"Productivity will, therefore, account for about two-thirds of our GDP growth, compared to just one-fifth in the last decade," the committee said in its recommendations report released on Monday.
The committee, chaired by Finance Minister Tharman Shanmugaratnam, listed seven strategies to boost productivity through a range of initiatives. These include growing skills and innovation initiatives, bolstering the manufacturing sector and nurturing large enterprises.
With better skills comes better jobs and therefore higher wages, just like the case at "Muthu's Curry".
There is more to just good fish head curry at "Muthu's Curry" in Little India. Since 2006, wait staff at the restaurant have been carrying PDAs that allow for direct orders to the kitchen.
Aisvaryam, the company that runs "Muthu's Curry", forked out about S$90,000 for this wireless system, but said it's worth the investment.
The system has helped to reduce errors and speed up operating workflow. The easy operating workflow and training allowed the company to hire non-Indian and first-time service staff.
Moving forward, Aisvaryam is also developing standard procedures for recipes to cut down reliance on Indian chefs and enable it to hire non-Indian chefs.
To ensure consistency and quality of food, and reduce the need for skilled manpower, Aisvaryam is setting up a central kitchen at FoodXchange for its marination and sauce preparation.
It is working with the Food Innovation & Resource Centre (FIRC) - a SPRING Singapore-Singapore Polytechnic initiative for local enterprises - to upgrade its packaging capabilities in preparation for its franchising expansion and to protect their intellectual properties.
Visvanaath A, CEO of Aisvaryam's Fine Foods Pte Ltd, said: "With the introduction of PDAs, my staff efficiency has increased by 50 per cent, which means faster turnaround for my customers, which (means) more revenue for my company. As a result, my company is able to increase our staff wages by 10 to 15 per cent."
The ESC said Singapore has a lot of untapped potential to increase productivity in every sector of the economy.
In absolute levels, Singapore's productivity in manufacturing and services is only 55 and 65 per cent of that in the US and Japan.
In the retail sector, the country's average level of productivity is about 75
per cent of that in Hong Kong and one-third that of the US.
In construction, productivity level is half of the US and one-third that of Japan.
The committee has suggested setting up a high-level national council, as well as a National Productivity Fund, to drive efforts to boost productivity. To match this, Continuing Education and Training will be expanded to get 240,000 Singaporeans to raise their skills by 2015.
The committee said lifelong learning must become an integral part of society. For lower wage workers, one way is to enhance the Workfare Income Supplement (WIS) scheme to provide stronger incentives for older workers to stay employed and get more training.
The committee said the WIS introduced in 2007 has succeeded in raising incomes and encouraging low wage workers to work.
Another aspect of getting companies to invest in productivity is to reduce the reliance on foreign workers. Hence, the proposal is to raise foreign worker levies progressively.
NTUC Secretary-General, Lim Swee Say, said: "The last 10 years, one reason why we achieve only 1 per cent productivity (growth) was because some sectors in the Singapore economy did not do their job!
"We had sectors in Singapore that registered negative productivity growth in the last 10 years. That's why the labour movement feels very strongly that this time round, we must make sure that every sector of the economy (makes significant improvements in productivity).
"(This is especially so for) the lower-productivity, the lower-skilled sectors, which traditionally, because they were not subjected to global competition, they always look for easier way out to solve their problem, always run to the Ministry of Manpower to ask for more foreign workers."
"Foreign workers are good, but too many foreign workers growing at too fast a rate is no good for the economy because it dilutes our focus on productivity," added Mr Lim.
The government is expected to give details when it responds to the ESC report during the Budget debate later in February.
Innovation is of course a key driver of productivity and that is where research and development comes in. The committee has recommended that Singapore raise its gross expenditure on R&D to 3.5 per cent of GDP by 2015.
That will put Singapore on the level of developed countries like Sweden, Finland and Japan.
One way is to expand centres of innovation in polytechnics to provide local companies with technological help so they can enter growth areas like medical technology and clean energy.
Another is to introduce design thinking programmes in schools to nurture a next generation of creative Singaporeans.
The committee said the recommendations spelled out in the report will give Singapore the opportunity to invest in its people and restructure the economy. How successful Singapore will be in implementing the strategies will require a national effort across all sectors.
- CNA/ir
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