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SINGAPORE: The Singapore government will be committing S$1.1 billion a year over the next five years to support the national bid to raise productivity.
This will be in the form of tax benefits, grants and training subsidies to improve productivity among workers and companies.
Finance Minister Tharman Shanmugaratnam said this will help Singapore achieve its ambitious productivity growth target of two to three percent annually over the next 10 years.
To oversee productivity efforts, a new high-level National Productivity and Continuing Education Council, to be chaired by Deputy Prime Minister Teo Chee Hean, will be set up.
The council will also include members from the government, business community and labour movement.
Besides galvanizing the major national effort required to boost skills and enterprise productivity, the council will develop a comprehensive system for Continuing Education and Training (CET).
It will also oversee the work of the different government agencies and promote close collaboration amongst the business sector, workers and unions, and the public sector.
Mr Tharman, presenting the 2010 Budget Statement in Parliament on Monday, explained that the easy gains in productivity are over, following major strides in productivity growth in the past decades.
He added that making the next leap in productivity will involve transformations at three levels.
Firstly, Singapore will have to restructure its overall economy towards higher-value activities and exit from less efficient ones.
Mr Tharman said this broad economic restructuring is how major improvements in productivity have been achieved in many of the advanced economies.
As for which enterprises should succeed or phase out, the finance minister said it is for the market and not the government to decide.
Secondly, Mr Tharman said there is a need to upgrade individual industries and enterprises.
He said the Budget will extend strong support for them to do so, in every sector.
For instance, the government will give significant tax reliefs to businesses that invest in skills and innovation.
It will also provide grants for customized, industry-based initiatives.
Thirdly, the finance minister said Singapore must raise the skills and creative potential of every worker.
To do so, he said the government will progressively build up a first-class system for Continuing Education and Training (CET) over the next decade.
Mr Tharman said: "This will be a major investment in our people, up and down the skills ladder. However, we can only make our next leap in productivity and incomes if every individual takes the initiative to develop his skills and expertise, and accomplish more in his job and career. Our employers must also empower their people to find new ways to add value and help unlock every worker's potential."
To complement investments in productivity, Mr Tharman said Singapore must also manage the supply of foreign workers. The best way to do so, he said, is through the price mechanism. That is, by raising foreign worker levies rather than through imposing numerical limits.
Mr Tharman said: "This allows the foreign workforce to fluctuate across the economic cycle, and enables employers who are doing well and need more foreign workers to continue to hire them rather than be constrained by fixed quotas."
The finance minister said Singapore will phase in higher levies gradually over the next three years so that companies know well in advance what will happen and have time to adjust.
Summing up, Mr Tharman said that the various initiatives to boost productivity will transform Singapore into an advanced economy with superior skills, quality jobs and higher incomes for citizens.
- CNA/ir
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