Speech at Service Industry Transformation Conference

Minister for Manpower Josephine Teo, Grand Hyatt Hotel

Mr Tan Peng Yong, Chairman of the Singapore Productivity Centre

Friends and Colleagues from our Trade Associations and Chambers

1. Thank you for inviting me. 
2. Before I came in, I had a chance to tour the exhibits and was very encouraged to see the efforts our companies are making.  I will say more about that later.
3. I understand that earlier in the morning there was a series of masterclasses and talks.  People from different businesses are sharing experiences with one another, and learning together.  This is very useful.
4. The economy today is not quite the same as a year ago. Some people are a bit worried and they might even ask, “Why are we still thinking about transformation and jobs of the future? Should we instead think about survival and jobs of the present?”  
5. My simple answer is that we have to do both.  We are closely monitoring every aspect of our economy and today, the picture is nowhere near gloom and doom. 
6. In fact, some sectors continue to do well.  Overall, total employment continues to grow and retrenchments remain low. Vacancies have fallen and there is more caution in hiring. 
7. But if you ask our businesses, they will tell you the labour market remains fairly tight.  Even if it eases somewhat in the short-term, it does not change the fact that Singapore is fundamentally labour-constrained. Because of that, many of them can see the need to become more manpower-lean.
8. It is also not just in Singapore that businesses want to be more manpower-lean. A few weeks ago, I was in Chongqing to attend the International Smart China Expo.  I met a Singapore businessman who was very excited and said, “You’re the manpower minister, I must talk to you.”  Since he was in the F&B business, I braced myself for an earful on his manpower issues.
9. To my surprise, he said he faced the same problems for his outlet in a major city in China - difficulty getting younger workers to work the long hours.  But he already knew how to handle such issues. He had transformed his business model and spent years to develop ready-to-cook products that can be sold online.  He keeps just a few brick-and-mortar outlets to allow customers to sample his cuisine, but most of the sales growth is online. He ended up thanking the Government for “forcing” him to transform!
10. Fortunately, most of you are here not by force.  Many of you have built up good capabilities, and have your diversified customer bases. You have real potential to distinguish yourselves, pull ahead of the competition.  You know you have to keep improving.  If you hesitate because of short-term uncertainties, then the edge that you built up painstakingly could be lost. 
11. In other words, many of our businesses understand that this period of moderation in growth can also be an opportunity to sharpen our competitive edge.  We can take advantage of this time to put in new systems and processes to better manage costs, improve products and services to capture market share.  By doing so, we can also design jobs to make better use of our manpower resources.  
    
    Transforming business and jobs
12. Among retail firms, for example, some have decided to take action despite the challenging conditions.
13. Audio House is a local SME specialising in the sale of electronic products, that faced two typical challenges:
    •Hiring difficulties;
    •Declining sales in its brick-and-mortar shops.
14. What did they do? First they developed new capabilities to support online purchases.  But it also went further to create a cashless electronics showroom. Every item has a QR code that can direct customers to their online portal.  You can settle payment and delivery arrangements without much fuss. This has not only made inventory management more efficient, it also eliminated routine administrative tasks, such as manual counting of cash and matching to the cash register’s report, things which generate very little value to the customer.
15. Their workers benefit too. They can now be reskilled to take on higher value-added roles such as service ambassador to provide personalised customer experiences. They have higher job satisfaction from customer engagement.
16. Outside retail, other firms are finding ways to tap on the expertise and experience of older workers.  
17. Take Fei Siong for example. Being in the F&B industry, Fei Siong, like many of its peers, generates a lot of food waste.
18. Its cleaning staff, many of them aged 50 or older, used to have to manually transport trash bags filled with food waste, each weighing 80 to 100kg, from the collection points to disposal bins every day. It was tedious and backbreaking work.
19. Fei Siong decided to invest in eco-digesters which use microbes to convert food waste into water and carbon dioxide. The water can then be discharged, resulting in a much lighter load and fewer trips needed to dispose of the food waste.
20. Fei Siong’s cleaning jobs are now safer and easier to manage for their older workers.  Their cleaners have been reskilled, in areas such as food waste management, maintenance of the eco-digesters, and as ambassadors to educate the public and stall-holders on the proper ways of food waste disposal.
    
    Sustaining the momentum for restructuring and productivity growth
21. Our hope is that more firms will take action, so that collectively, our service sector becomes much more competitive. It will also help more of you manage the phased reductions to the Dependency Ratio Ceiling or DRC in the Services sector, which DPM Heng Swee Keat announced earlier this year.
22. On the Government’s part, please be assured that we will continue to support businesses in your transformation journeys. We’re in this together.
23. This will be done through various programmes under the umbrella of the Lean Enterprise Development (LED) Scheme, which helps firms transform to become more productive and more manpower-efficient.
24. As of June 2019, more than 10,000 firms from the Services sector have tapped on the LED Scheme to support their business and job transformation. The firms mentioned earlier – Audio House and Fei Siong – are in fact beneficiaries of the scheme.
    
    Official launch of the Service Industry Transformation Programme to drive industry transformation
25. To keep up the momentum, I am pleased to announce the new Service Industry Transformation Programme (or SITP in short), a new programme under the LED Scheme umbrella.
26. The SITP is co-developed by the Singapore Productivity Centre and Workforce Singapore to help firms in the service industry keep pace with the ongoing industry transformation effort.
27. Participating firms will get service design tools to re-think your service delivery model, and how to start business transformation. You will also get guidance from facilitators, and funding support of up to 90% for SMEs.
    
    Six firms are already on board the SITP since the pilot launch in August.
28. One of them is The Cellar Door Pte Ltd. They had earlier launched The Nook, an innovative, lean F&B hybrid self-service bistro which employed Service Ambassadors to assist customers.
29. The Cellar Door is now looking to leverage the data they have collected from operating The Nook to open The Nook 2.0 as part of their business expansion. As they had wanted to keep to a manpower-lean operating format and possibly improve on their current model, they decided to tap on SITP.
    
    Conclusion
30. I wish Mr Steven Foo, managing director for The Cellar Door, all the best in his team’s endeavour, and I am confident that we will see more firms following their footsteps and embarking on their own transformation journey.
31. Because besides the Government, our Trade Association and Chambers (TACs) are also committed to provide support – in fact, ten of our TACs from the Services sector will be pledging their commitment to drive transformation in their sectors today.
32. Workforce Singapore will bring these TACs together to share ideas and best practices so that they can better support their members’ business transformation and development of human capital practices.
33. In closing, let me just say that Singapore is an unusual position where so many parties are aligned and working together to move forward. The outlook may not be so clear.  What is very clear is that we have an opportunity to strengthen ourselves through transformation.
34. Let’s do this together, in support of one another! Thank you!