July 17th 2004

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Articles from this issue:

COVER STORY: Indonesian elections ... and Australia

CANBERRA OBSERVED: Latham affair lifts election temperature

AGRICULTURE: Rural unrest spreads

QUARANTINE BREACH: Exotic disease outbreak threatens Qld citrus industry

INDUSTRY: Singapore recovers on back of manufacturing

FAMILY: Child care - in whose interests?

ARTS & MEDIA: 'The next program contains...'

FILM: AFA calls for ban on 'arthouse smut'

MIDDLE EAST: Can Iraq's interim government end the insurgency?

NUCLEAR WEAPONS: Terrorism marks the end of deterrence

UNITED STATES: Curtains on Camelot

STRAWS IN THE WIND: Skimming administrative fat / What about Uganda? / 17 years of war

Premier Beattie's ethanol 'mania' (letter)

Sugar Package (letter)

Mondragon (letter)

Journalists and Iraq (letter)

BOOKS: George Santayana, by Noël O'Sullivan

BOOKS: Tilting the Playing Field, by Jessica Gavora

OPINION: Time to act on North Korean tyranny

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Singapore recovers on back of manufacturing

by Jeffry Babb

News Weekly, July 17, 2004
The Singapore economy registered a positive 7.3 per cent growth in the first quarter of this year. The strong performance came from manufacturing which grew 14.5 per cent, driven by the increased output of pharmaceuticals and tech products. In fact, in a recent announcement, the Ministry of Trade and Industry (MTI) predicted gross domestic product will expand by between 5.5 per cent and 7.5 per cent this year - stronger than the earlier forecast of 3.5 per cent to 5.5 per cent.

At the latest pace, Singapore will be one of Asia's fastest growing economies this year.

Manufacturing is still important to Singapore's economy. Consistently ranked as one of the world's most competitive and vibrant economies, Singapore is focusing on enhancing its role in manufacturing to engage in the entire value chain, from idea conceptualisation to R&D production, marketing and supply chain management. Manufacturing is one of the central pillars of the economy, contributing about 25 per cent of Singapore's GDP.

Singapore is an open economy with negligible tariffs. From oil rigs to disk drives to flavours and fragrances, Singapore has gained "pole position" in many areas of manufacturing.

The Singapore Economic Development Board (EDB), the lead agency that plans and executes strategies to sustain Singapore as a compelling global hub for business and investment, has worked tirelessly to promote Singapore as a global player in high-value manufacturing.

Last year, the entire manufacturing sector contributed 26.4 per cent to the Singapore economy, an increase over the 24.1 per cent in 2001. Over the last 15 years, manufacturing's share of GDP has been over 20 per cent and this trend will continue. It is worth noting that advanced economies like Japan and Germany have retained manufacturing as a significant component of their GDP.

Manufacturing know-how is essential in order to build a strong technological base for R&D promotion. In order to achieve this, Singapore must go beyond being a mere production base to become an innovative creator of new capabilities, processes, products and businesses.

With today's shorter product lifespans, having a highly skilled workforce and impressive response rate helps Singapore maintain its competitiveness as a choice manufacturing location. Its strong intellectual property regime and network of free trade agreements are other factors that provide a compelling reason for multinational corporations manufacturing higher end products to locate their manufacturing facilities there.

Singapore's competitive edge lies in its ability to provide a total value chain of activities, along with its strong brand name and association with quality and reliability.

Since the 1970s, Singapore has seen the movement of low-end jobs out of the country. As Singapore ascends the value chain, there will be sufficient jobs for Singaporeans till 2010 and beyond, although it currently experiences a mismatch of skills. More jobs will be available for those with post-secondary education, degrees and PhDs as Singapore move up the value chain.

The change in the employment climate is evident since 1991, when jobs availability in the manufacturing sector has dropped from 28 to 20 per cent. The figure will continue to drop to the low teens as it has done in developed countries like the US and Australia. Jobs in the service sectors, which include education, health care, information technology and financial services, will constitute up to 80 per cent of the jobs.

Globalisation has made Singapore's job market and economy vulnerable to the fluctuations in the world economy as well as international incidents. These include the Asian financial crisis, the September 11 terrorist attack, the Bali and Jakarta Marriot bombings, the war in Iraq and SARS.

As the employment landscape changes, some jobs lost when the economy took a dive are unlikely to return. There are jobs available but retrenched workers do not have the necessary skills to fill these jobs.

The Workforce Development Agency (WDA) was set up to address this. The agency encourages workers to retrain and upgrade skill sets to remain employable. WDA spots industries where jobs are available and identifies the skills with which workers need to be equipped to be employed in those jobs.

Subsequently, WDA provides training sources based on the previously mapped skill sets. In this way, benefits of training are apparent to potential participants of WDA's training programs as it secures employment opportunities rather than just training in hope of employment.

The Place and Train Program, one of WDA's initiatives, is unique as it guarantees a job after completion of training. This is possible as job-seekers will first be employed by companies before attending the relevant courses, even if they have no prior experience.

To cushion the negative impact of the economy on Singapore's job market, the Government turned to wage restructuring. Earlier this year, the tripartite taskforce on wage restructuring recommended that the Monthly Variable Component (MVC) of workers' wages be raised to up to 10 per cent of total wages. This feature allows employers to exercise flexibility to adjust wages according to the performance of their companies.

In tough times, employers have the option to decrease the MVC to cut costs. With the built-in mechanism to minimise cost, retrenchment is less likely as employers can save cost by cutting wages rather than shedding employees.

On the other hand, when the companies do well, employers have the tools to reward employees by increase the MVC.

Workers need not fear that employers will take advantage of the flexible nature of the MVC and not reward them when profits are reaped. Protection comes in the form of the Employment Act and the unions.

Changing the mindsets of workers is important. Through the Ministry of Manpower's campaigns, initiatives and programs, is conveyed the message of how the employment landscape has changed. The picture clear in their minds, everyone understands the need to change their mindsets.

A restructuring economy requires workers to shift to different jobs and industries as emerging sectors replace those which have bowed out permanently. Individuals must be prepared to embark on brand new careers in growth industries where there are employment opportunities, even if it means moving out of their comfort zones.

While it is natural for workers to seek alternative employment in similar jobs and industries to capitalise on their work experience, those who are not prepared to retool and switch industries risk finding it difficult to secure employment.

The new economy calls for individuals to be nimble and agile to change, not just jobs, but careers over their working lifetimes.

  • Jeffry Babb

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