Speech at SBF Productivity Conference and Exhibition 2016

Mr Lim Swee Say, Minister for Manpower, Suntec Singapore Convention & Exhibition Centre

1. First of all, I would like to thank SBF for your leadership in staging the Singapore Productivity Conference and Exhibition.  
2. Productivity growth is critical to the future of Singapore.
3. Without productivity growth, our economy cannot sustain healthy growth; our people cannot sustain career and wage growth; and our enterprises cannot sustain profitable growth.
4. I shall elaborate.
5. First, our future economy cannot grow healthily without productivity gain.
6. In the past five years, GDP growth has dropped from an average of 4% between 2011 to 2014, to 2% in 2015, and less than 2% this year.
7. Next year will be equally challenging.
8. There are two reasons for this low growth we are going through.
9. First, cyclical slowdown in the global economy has dampened demand for our products and services in the short term.
10. Second, structural transition in our local workforce will redefine our growth capacity in the long term.
11. Even though our local labour force is still growing, the rate of growth has dropped sharply:
12. From 4% to 2%, towards 1% by 2020.  It could stagnate in the next decade.
13. Coupled with flat productivity and lower growth of foreign manpower, GDP growth dropped in tandem with the drop in workforce growth, from 4% workforce growth + 0% productivity growth = 4% GDP growth, to 2% workforce growth + 0% productivity growth = 2% GDP growth last year.
14. We cannot hope to go back to high growth simply by taking in more foreign workers.  
15. The only workable and sustainable solution is to up our productivity gain.
16. 1% + 2% =3%, so that we will have quality growth of 3% driven by innovation and productivity, and not be stuck with low growth of less than 2% for too long.
17. Second, our people cannot grow their careers and wages without productivity gain.
18. In term of stock, our local workforce will grow more slowly in number.
19. But in terms of flow, our local workforce will grow faster in quality.
20. Take 2015 as an illustration, our local workforce growth was flat; it increased by just 700.
21. But in that same year, 190,000 locals left the workforce, and about the same number entered the workforce.
22. With better education and skill profiles, those entering every year are looking for jobs that are different from those vacated by those who have left the workforce.
23. What this means is that economic transformation is important - not just because they will bring about higher productivity for the economy to grow more healthily - but because they will bring about better jobs and better wages for our people to grow better in their careers.
24. Last but not least, our businesses cannot grow profitably without productivity gain.
25. We are one of the most competitive economies in the world today.
26. We are able to offer products and services cheaper than those who are better than us, or better than those who are cheaper than us.
27. But with better education and upgrading, the cheaper competitors are becoming better.
28. With effective use of technology, the better competitors are becoming cheaper.
29.  Therefore, if our productivity gains continue to lag behind wage growth, our competitiveness will progressively be eroded.
30. Imagine: if we ever allow our cheaper competitors to become better than us, one day, they will be cheaper and better than us.
31. Likewise, if we ever allow our better competitors to become cheaper than us, one day, they will be better and cheaper than us.
32. We should therefore never allow this to happen.
33. We have to transform faster to become more productive to compete on price, more innovative to compete on quality, and more responsive to compete on speed.
34. Allow me to share the story of a fisherman.
35. Fishing is resource-intensive. To make more money, he has to catch more fish. So he moves from shallow waters to deeper seas.
36. To operate bigger boats and more boats, he hires more workers. His business has become labour intensive.
37. As the operation grows bigger, the market size of the local village is too small for him. So he invests in machinery to process the raw fish into fish products for markets farther away.
38. His business has become capital-intensive.
39. As competition gets keener and stronger, he uses leading-edge technology to maintain the freshness of his products.
40. His business is now technology intensive.
41. As he regionalises and globalises to become a market leader, he has to create ideas to differentiate himself from the competition.
42. So, starting from a resource-intensive industry, the fisherman now finds himself operating in an innovation-driven industry.
43. Indeed, breaking bottlenecks is a journey with no end.
44. Every enterprise will face different bottlenecks at different stages of growth.  
45. Breaking one bottleneck, if done successfully, is bound to create the next one.
46. So along the way, we must have a clear thinking on where we are now, where we want to be next, what is stopping us from getting there, and how to break these bottlenecks ahead of the competition.  
47. For an enterprise that is able to produce more than it can sell, the market is the bottleneck. Digital transformation, product and service innovation may be the answer.
48. For an enterprise that is unable to produce quality products cost-effectively and consistently, production is the bottleneck. Maybe lean manufacturing is what it needs.  
49. For an enterprise that is unable to build and strengthen its core competency, human capital is the bottleneck. Maybe progressive employment practices will help.
50. For an enterprise that is unable to transform and adapt fast enough, knowhow and resources are the bottlenecks. Maybe partnership in co-development of innovation is the way to go.
51. It is never easy to transform and adapt but we are in this together.
52. With tripartite efforts, we are helping companies and industries to transform, and helping our people learn new and deeper skills.  
53. We have started the journey with the pioneers and the early adopters in the various industries, supporting them in their efforts to build new capabilities, new capacity, new markets and new human capital.
54. In our journey ahead, our challenge is to bring on board the early majority, the late majority, for our innovation driven growth to be a pervasive growth for all as well
55. Our Trade Associations and Chambers are playing active roles.
56. SBF (Singapore Business Federation) is a fine example. 
57. From spearheading the Singapore Productivity Conference and Exhibition, to championing the HIPS (Holistic Industry Productivity Scorecard), and many more major initiatives.
58. For that I thank the SBF.
59. In conclusion, to transform and adapt is our only way to a better future for our economy, our businesses and our people.
60. Let us all work together, support each other and move into a better future for all.
61. 25 years ago, I was based in New York City (NYC) with EDB and NYC was much less safe than today. Every night at the start of the 10pm news, we heard this message: “It is 10 o’clock, do you know where your children are?”
62. Today, as we go through this period of economic transition, I would like to ask each and every one of you to think about this: “It is transformation time. Do you know where your bottlenecks are?”
63. On that note, I wish you all a productive and fruitful conference and exhibition.
64. Thank you.