Minister urged firms to adopt 3 R approach

Minister urged firms to adopt 3 R approach
- The Straits Times, 04 February 2010

We refer to The Straits Times article ("Unproductive companies may just have to quit", 3 Feb).

2.   We wish to clarify that during the interview with The Straits Times, the Minister for Manpower Mr Gan Kim Yong, who is also the co-chair for the Economic Strategies Committee’s Sub-Committee 6 on Fostering Inclusive Growth, did not call on unproductive companies to quit. 

3.   Instead, he had called on the companies to adopt the 3 R approach:  to Reposition their business strategies, to Remodel their business processes and to take Responsibility in raising productivity levels of their workers. The Sub-Committee had proposed to the government to set up a National Productivity Fund and other broad-based incentives to help companies improve their productivity.

4.   In response to the journalist’s question, Mr Gan explained that companies which remain unproductive and uncompetitive may have no choice but to be phased out over time. As in past economic restructuring, we have also seen businesses moving out of Singapore.  However, those which can transform quickly will emerge stronger.

Unproductive firms may just have to quit
They may have to go out of business or move out of Singapore: Minister
- The Straits Times, 03 February 2010

IF ANYONE wondered how seriously the Government would push companies to raise productivity in order to fuel future economic growth, Manpower Minister Gan Kim Yong provided a plain answer yesterday.

Companies that cannot raise productivity may just have to go out of business or leave Singapore, he said.

'In past economic restructuring, we have also seen businesses moving out of Singapore. That process has to continue,' he told The Straits Times, a day after the Economic Strategies Committee (ESC) released its recommendations.

He chaired a sub-committee on fostering inclusive growth, which recommended that Singapore should more than double its productivity growth rate to 2 per cent to 3 per cent annually in the next decade.

His group felt that a change needed to achieve that goal is to raise the foreign worker levy to discourage companies from importing too many low-skilled workers.
While he acknowledged that the foreign worker policy had allowed companies to thrive and expand the economy over the past decade, he said this could not continue for the next 10 years.

'We need to moderate the inflow of foreign workers so that companies are motivated to invest in productivity,' he said.

The sudden influx of foreigners in the last decade has unsettled some Singaporeans, who have complained of overcrowding on public transport systems and increased competition for everything from housing to government health subsidies.

Mr Gan conceded that the 'social constraints' of importing too many foreign workers was a reason that his sub-committee recommended the shift towards better productivity.
But he denied that the move to slow the intake of foreigners was politically motivated. 'The starting point really is productivity-driven,' he said.

Besides, there are also other types of constraints to growing the foreign worker population in Singapore, he added. For instance, land and other public infrastructure are also finite in Singapore.

Analysts and corporate chiefs have welcomed the strong emphasis on ramping up productivity, but they also warned there could be unintended consequences.

'If some companies cannot survive, unemployment will grow. So we must be prepared for this,' said economist Tan Khee Giap from the Lee Kuan Yew School of Public Policy.

Mr Gan gave his assurance yesterday that to minimise this risk, the ESC is proposing that the foreign worker levy be raised gradually.

Adjusting the levy, instead of directly limiting the number of foreigners allowed per company, also makes for more flexibility and does not penalise companies across the board.

This way, companies highly dependent on cheap foreign workers - for example, to staff night shifts which locals shun - will still have access to foreign workers.

'We have to make sure that we have enough foreign workers, especially in sectors like construction, where there are not enough local workers,' Mr Gan explained.

'For some companies which are competitive and growing very fast, they need foreign workers to support their growth.

'Maintaining the current balance at one-third (of the workforce) is probably a wise decision and the most sensible thing to do.'

The difference is that these companies will now have to bear a much higher levy, so there is an incentive for them to find ways to change the business processes, said Mr Gan.

'They can change the shift system, see how they can deploy their workers more efficiently or go for part-time workers,' he advised.