Commentary: Matching older workers to jobs the key manpower challenge for Singapore
Technology is not neutral to the job market and matured workers are at greatest risk, says one NTU professor.
SINGAPORE: Technology has changed the way we live, work and learn.
Businesses are relentlessly using technology to trim costs and create new products, driven by a motive to maximise profit but it is in society’s interest that businesses also employ technology to other ends.
The disruptive nature of technology naturally creates unemployment and consequently job vacancies as old business models wither and give way to new ones.
The complications of technology’s disruptive nature manifest in two ways. The number of displaced workers is likely outnumber new job vacancies in the short term.
At the same time, the presence of these new job vacancies implies that existing workers subsequently retrenched do not have the new skills needed in these new roles.
POCKETS OF LAYOFFS
Some say Singapore seem to be coping fine with disruption, where it was recently reported that Singapore’s GDP in the first quarter grew 1.7 per cent, while unemployment and retrenchments over the same period have fallen.
While retrenchments have fallen to a seven-year low, suggesting an improved economic outlook with fewer firms needing to lay off workers, we have to be mindful that there may be still pockets of layoffs in some firms and sectors due to technological disruption and business restructuring as the economy transforms, NTUC assistant secretary-general Patrick Tay said a month ago.
So we must train the unemployed and retrain workers fast. In this, technology must be employed to train workers to fill out these job vacancies to keep pace with technology’s creation of unemployment.
It is only when we can use technology to convert unfilled job vacancies to filled vacancies that we can say technology is neutral to job markets.
But technology is not neutral to job markets now. As long as companies are motivated to employ technology to create new business opportunities, products and services and are financially rewarded so, the training role of technology in reskilling workers to fill new roles will lag behind.
To the extent that there is little business imperative for companies to aid workers to transition into new roles, it can be said that there is market failure in training and government intervention should be expected. But how to intervene is not so straightforward.
HELP WORKERS MOVE INTO NEW GROWTH AREAS
A typical firm normally will use 70 per cent of its resources to at least maintain their market share in existing products, devote 20 per cent to boosting related products and focus 10 per cent on creating new products, based on business surveys. Companies use technology to compete in all these three lines of activities.
As we expect, new technologies will lead jobs engaged in the production of existing products to be redundant while there may be both job displacement and new vacancies in the production of related products. Most new roles are created in the production of new products.
Since all three activities are under one top management, it seems incumbent on company leaders to make reskilling existing workers a priority so that job vacancies can be filled quickly by people already familiar with the company’s operations and practices.
The most agile and innovative companies already attract strong talent yet so many organisations are obsessed with chasing after new talent rather than retaining those they have.
A mindset shift may be needed where the most vulnerable workers in this regard are matured, middle-aged workers.
Reskilling a company’s current manpower, rather than looking for, onboarding and training young hires, seems like a more time and cost-effective approach to human capital management for companies.
From a macro-economic perspective, it is also a more efficient approach to job-skills matching in a tight labour market, and as the economy restructures.
It is also better for the firm and for society if all firms reskill their workers in order to help them keep their jobs.
Retrenched, matured workers may otherwise spend months and years searching for a new position and gaining needed skills to be competent in their role.
Where companies already expend resources to help talent progress through the ranks within, there is a case to be made for companies to similarly focus on reskilling existing workers with the required skills to prepare them for another job within the same firm.
To a company, it is a question of marginal cost versus marginal benefit. If a worker is redundant, the firm will retrench him or her. If a new position is required, the firm will recruit from the labour market.
But if reskilling is cheaper, the firm will retrain the worker and transfer him or her into the new role.
INCENTIVISE FIRMS TO RETAIN WORKERS
From a public policy perspective, we should reduce the costs of reskilling and increase the costs to companies if they do not reskill their workers.
The Government can and has done this through a mix of tax incentives, grants and other catalysts. Over recent years, it has introduced initiatives like SkillsFuture and worked through organisations like the Labour Movement to enhance job matching for the Singapore workforce.
The Government also understands the need to aid older workers who may be the most vulnerable group. A new tripartite workgroup will be set up to look into the concerns of older workers, Manpower Minister Josephine Teo recently announced, highlighting that one in three workers in Singapore is above 50 and have anxieties about the future as technology disrupts businesses and jobs.
All firms in Singapore need to foot a Skills Development Levy under the Skills Development Levy Act. Payable at 0.25 per cent of the monthly remuneration for each employee, and administered by SkillsFuture Singapore, the funds are used to subsidise firms when they retrain their workers.
The Government could tap on these funds to give more subsidies to firms who reskill existing workers for new roles in the firm’s growth areas.
By helping firms to fill positions of potentially high growth, this also supports our public policy objective of encouraging innovation and supporting companies who take calculated risks.
When firms reskill existing workers for the production of new products, there is little economies of scale and the new product may be risky and short-lived. So reskilling rather than hiring can save companies recruitment and other transactional costs involved in setting up a new team, making innovation “cheaper”.
The psychological benefits can also be immense as the firm’s manpower sees that firm is innovative and at the same time, looks after their interests.
A blunt tool is to give firms that do not reskill their workers a lower priority in terms of Employment Passes for foreign job applicants, but this may not be appropriate to all sectors, especially those experiencing a talent crunch or smaller companies and start-ups that might have less flexibility in hiring.
Another option is to boost job matching for retrenched older workers. In this, the Government could encourage internships for this segment of the workforce and reward firms if they eventually hire them with a good wage.
Some defrayment of wages is already provided through the Career Support Programme but it doesn’t encourage firms to retain workers after 12 months when support tapers off.
The best way to improve the lives of Singapore's workers is gainful employment, in good jobs with good wages, said Labour Chief and Minister in the Prime Minister’s Office Ng Chee Meng on Tuesday (May 15) in Parliament.
“It is critical that our businesses take the lead and do the right thing, that when our workers do their best, remember to share the gains with their workers and give them what is fairly theirs”, he said.
This also applies in helping older, matured workers deal with disruption, where they in turn can contribute back to a company’s goals, given their years of experience and knowledge of the business.
So we should focus our efforts on tackling this chief manpower challenge.
Chew Soon Beng is professor of economics and industrial relations at Nanyang Technological University.