Speech By Deputy Prime Minister and Minister for Finance Lawrence Wong at the Singapore Economic Policy Forum on 18 October 2022
18 Oct 2022President of the Economic Society of Singapore, Professor Euston Quah,
Provost of Singapore University of Social Sciences, Professor Robbie Goh,
Distinguished Guests,
Ladies and Gentlemen
Introduction
1. I am happy to join you this morning for this economic policy forum.
2. Some weeks ago, I had shared my thoughts on the social issues that we are looking at as part of the Forward Singapore exercise. So this morning, I thought it would be appropriate to share more about the economic issues.
3. Economics, of course, is something close to my heart because I started my career 25 years ago in the public service as an economist. But my love for economics was sparked earlier when I was in VJC by my JC teacher, Miss Ek Soo Ben, who of course
later became the principal of VJC. I know there are many teachers here in this room today. So, I want to start by thanking all of you for your service and contributions in making the subject come alive for our students. And congratulations also to
the award recipients, those who are getting the Outstanding Teacher awards. Let's give them a big round of applause.
4. The first job I had as an economist was to try and understand the Asian Financial Crisis in 1997. And now 25 years later, I continue to grapple with the central questions that all countries face, including Singapore, which is how do we keep our
economy growing to provide a better life for our people? How do we ensure that the fruits of growth are distributed inclusively for all to enjoy?
5. And we will have to tackle these issues amidst a more uncertain and volatile global economic environment.
a. As all of you know, the broader trends of worsening US-China relations, the receding of the high tide of globalisation, the shoring up of resilience at the expense of efficiency; all of this will make global growth more difficult.
b. We are also entering a period of lower growth and higher inflation for the world. Countries everywhere will be faced with tough choices. How to bring down inflation without over crimping growth, how to provide support without stoking sharp increases
in prices. We will all have to find the balance amidst these trade-offs.
c. In the longer term, Singapore's economy is maturing. Our population is ageing, and our resident labour force is slowing down. It will be more difficult therefore to sustain the high levels of broad-based growth that we have experienced in the
past.
6. Nevertheless, we do have several things going in our favour.
a. We’ve established ourselves as a hub for the region and the world – a hub for business, investments, finance, talent and innovation.
b. Our reputation as a reliable and trusted hub has been enhanced through the pandemic.
c. In a turbulent world, we can remain a bastion of stability, openness and innovation – and we can continue to make a good living.
7. But the key to achieving that is that we must continue to refresh and update our economic strategies and make the most of the one resource we have – that is our people and human capital.
8. Today, let me share my preliminary thoughts on what more we can do in this area, and importantly also get your feedback and views later though our dialogue.
Twin Strategy – Stay Open; Develop Local
9. Our first imperative is to stay open and connected to the world.
a. This is not just essential, but existential, for Singapore.
b. We are a little red dot with no natural resources and no hinterland.
c. And staying open is the only way we can survive and thrive.
10. This is true for Singapore but openness is in fact the basic driver of human progress throughout the world and over long periods of history.
a. History is full of examples of large empires and civilisations that flourished when they were open to new ideas, people and technologies; but then went into decline when they put up barriers.
b. For example, and I am sure all of you are familiar with this, ancient China was at the frontier of technology centuries ago but it stagnated in the 15th century after it closed itself to the outside world.
c. The reason the Enlightenment and the Industrial revolution started in Western Europe was that this region of the world happened to be the most open, and it partly just out of luck and historical circumstances.
d. It is not a story of the triumph of the West as it is sometimes portrayed; it’s really the story of the triumph of openness. And we in Singapore are the embodiment of the story. We have thrived on being open.
11. Unfortunately, populism and economic nationalism are now on the rise in many countries.
a. Political parties seek to mobilise their base with proposals that sound too good to be true, and usually are too good to be true, and are aimed at appealing to sentiments of fear and frustrations – not to solve the underlying problems but to rouse and consolidate public support.
b. Take the example of what happened with Brexit. It's a very emotive issue. And for Britain, there are many strong and divided views on this matter. But in the run up to the debate on Brexit, there were claims that the UK would be economically better off leaving the European Union and many of these claims were really not founded on sound economics. Not surprisingly today, close to half of Britons feel that their daily lives are worse after Brexit, not better1.
c. We are not immune to such populist claims in Singapore either.
d. In recent years, we’ve seen very ugly anti-foreigner sentiment surfacing in some quarters; most times, the arguments are cleverly packaged to sound as reasonable as possible.
e. For example, some say we are not trying to shut Singapore off, we want to stay open in principle, but why not just get rid of more foreigners and then we can reclaim more good jobs for Singaporeans? Sounds very reasonable. And in fact, if you
take a poll, a lot of people might actually say yes to such a proposal. But hopefully not this group because as economists, you have been inoculated against such easy solutions.
12. Because that thinking is fatally flawed.
a. Getting rid of the foreigners doesn’t mean that the jobs will automatically go to Singaporeans.
b. On the contrary, if our policies become overly restrictive, global companies based here will simply find other places to operate in, places with larger markets or larger pools of expertise.
c. Then we will lose all the jobs that the companies brought here, and it includes many good jobs being done by Singaporeans. If this perception of Singapore sets in, decades of hard work to build up our hub will be wasted.
d. Our economy will contract, incomes will decline and go down in a tailspin. We’d end up with far worse problems, and it’s Singaporeans who will ultimately pay the price.
13. For us to continue to thrive, we must always pursue a twin strategy: stay open and develop local. It is a double-barrel strategy.
a. Stay open because we want to continue to attract the best companies and top talent to Singapore, so that we can have the best teams here to do cutting-edge work, and push the frontiers of possibilities.
b. At the same time, do everything we can to develop our people – and enable Singaporeans to excel and succeed in their chosen professions and careers.
14. This is why we have also been very deliberate in bringing in new investments to Singapore – make sure that these investments help to strengthen our capabilities and our people.
a. For example, we brought in the German engineering and manufacturing firm Bosch Rexroth, which specialises in drive and control technology that moves machines and systems.
b. They are one of our “Queen Bee” companies – they have a regional training centre in the Jurong Innovation District to train technicians and engineers in advanced manufacturing, and they offer industry knowledge and business networks to support other firms, especially our SMEs, in their transformation efforts.
c. All this creates significant positive spill-over effects for our economy – and it translate into better opportunities and jobs for Singaporeans.
15. I hope that through the series of conversations we are having in this Forward Singapore exercise, Singaporeans will better understand the importance for Singapore to stay open, and reject strongly any attempts to move us away from this basic
and fundamental orientation.
16. At the same time, our assurance to Singaporeans is that we will redouble our efforts to develop and support every worker and professional. We will do so in several ways.
a. First, by continually updating our manpower policies and rules to manage the flow of work-pass holders, and to ensure that they are of the right calibre – our tiered system of work permits, S-passes, Employment Passes (under the Compass
Framework), as well as the new ONE pass will enable us to achieve this.
b. Second, we will make sure that employers adopt fair employment practices, and we will take a strong stance against discrimination at the workplace.
i. While most employers are responsible, from time to time there are a few who fall short. We will take such breaches very seriously, investigate thoroughly and take prompt action against the errant employers.
ii. In fact, we will soon be enacting the workplace fairness legislation. This will send a clear signal that we have zero tolerance of discrimination at the workplace.
c. Third, we will invest more in skills training for our people, with a focus on developing more Singaporean specialists and leaders across all sectors of the economy.
i. For example, in the financial services sector, we now have more than 3,000 Singaporeans holding senior roles in banks and financial institutions. Many are not just leading the Singapore office; they are holding regional leadership positions here
and overseas.
ii. We will do more to develop Singaporean leaders in finance, as well as across all sectors of the economy.
iii. In the end, the global companies have to select and appoint their future leaders by merit, and there is often intense competition for these top jobs. But we will do everything we can to give Singaporeans that extra advantage by investing heavily
in their capabilities and skills.
Equip, Empower, and Assure Singaporeans
17. This investment in skills and human capital has been and will continue to be a key priority for the Government. Let me elaborate, next, on how we intend to do this – how can we better equip, empower and assure Singaporeans amidst
an open economic environment of constant churn and competition.
18. Our aim is to invest significantly in all Singaporeans and help them to build up the skills and capabilities they need to succeed throughout their working lives.
a. We have made a good start with SkillsFuture, this was to create a culture of lifelong learning.
b. We will continue to enhance SkillsFuture. Last year, over 660,000 Singaporeans benefited from SkillsFuture-supported programmes, which is very encouraging.
c. But for our workers to continue to compete and stay relevant, they will need to build deep skills and acquire deeper capabilities over time.
i. For some, short bouts of upskilling from time to time will be enough to top up our skills.
ii. But, frankly, just going for sporadic, half-day courses cannot possibly be enough. At best you get a taster of what to learn, but it surely is not enough to build deep skills. In fact, for all of us, such short courses are insufficient, especially
when the economic environment is undergoing such dramatic change and transformation. We will all need more extensive efforts to upgrade our skills and stay relevant amidst changing industry needs, or even to pivot to new areas where there are
more opportunities.
19. The bottom-line is that we will need to make it possible for workers to invest their time in more meaningful and substantial training, be it a few days, a few weeks, or even longer. We can do much more on this front, especially for our mature
and mid-career workers in their 40s and 50s.
a. They are more at risk of career disruption, as their skills may be less ‘current’.
b. They are also likely to have heavier obligations, taking care of both parents and children at the same time, which make it difficult for them to take time away from work for extended periods.
c. We must develop a system which can cater to their needs and help them continue to provide the best for their families.
20. All this will require a fundamental upgrading of our SkillsFuture ecosystem.
a. There are some things which we will have to consider, for example, how much more should we provide through the SkillsFuture Credit at major milestones of one’s life for upgrading, so that Singaporeans can update themselves on the
latest industry trends and skills.
b. Can we give employees peace of mind, and time off from work to focus on upgrading? Some firms here already have exemplary training leave policies, especially the global companies who understand well the value of human capital. But we should see
if this can be broadened across the entire economy, while taking into consideration of the needs of businesses.
c. Workers with families who have to undergo training for a few weeks or even a few months, to gain the skills necessary to transition into a new role or industry, will naturally be concerned about their incomes. So, we will have to consider how
we can better support them while they pursue training full-time.
d. We must couple all this with effective curation of courses, and close partnership between industry and the training providers, so that training is more responsive to changing industry needs, given our more dynamic environment. At the same time,
we have to provide more information and guidance to workers, so that they can take charge of their careers and have a better sense of their longer-term career progression goals and pursue purposeful reskilling and upgrading. We want them to be assured
that the training they undertake is of high quality and will lead to skills that are in-demand by employers and will also lead to better careers for themselves.
21. These are all that we need to do, and it is not going to be an easy task.
a. We have studied many countries – there are very few good models in this space. Some good practices in certain industries, but no country has a comprehensive nation-wide system of adult education and training that achieves all that I have
just described.
b. So, we are distilling the best practices from around the world, and studying carefully how to apply them in our context, and do this effectively in Singapore.
c. It will require very tight collaboration and partnership across the different stakeholders – be it training providers, educational institutions, employers and industry associations, workers and unions.
d. The Labour Movement, of course, will have an important role to play, because of their close links with companies and workers.
e. We are fortunate in Singapore to have a strong foundation of close tripartite partnership built up over many decades
f. So, if there is one country in the world that can do this well, it is Singapore. Working together, I am confident we can build a better SkillsFuture system that will enable all Singaporeans to develop and grow, and bring out the best in them.
22. A more effective and comprehensive SkillsFuture system will also provide assurance to Singaporeans at the workplace, especially to those who are at risk of being displaced.
a. We are looking at ways to provide better support for such displaced workers.
b. But it is also important to design and structure this support properly.
c. Because one of the downsides of the welfare systems that you have seen in other countries is that displaced persons who start working again end up losing most of their benefits that they get when they are unemployed. So the safety net inadvertently
becomes an incentive to stay unemployed rather than to look for a job.
d. We have to avoid this problem by designing our support system to make retraining and employment support easily accessible, especially for mid-careers and mature workers.
i. Help them to future proof themselves by constantly upgrading their skills.
ii. For those who are displaced, our system should nudge them towards active job search, and give them an injection of skills if needed, so that they can find good job matches that build on their wealth of skills and experience.
23. All of this put together will be a key part of our refreshed compact with all Singaporeans – that we will stay open as a vibrant hub for the world, at the same time, Singaporeans can be assured that they will never walk alone as they journey
through their careers. We will walk this journey together with all Singaporeans.
a. To invest in you, and help you excel and succeed.
b. To equip, empower and assure you throughout the way.
Strengthen Multiple Pathways of Progression
24. Finally, we will also need to strengthen the multiple pathways of progression in our society, to uncover the different strengths of our people, and help their talents flourish.
a. This is all the more crucial given the diverse aspirations of our society and the rapidly-changing needs of our economy.
b. Embracing this diversity will also allay the stress of everyone striving for that same, narrow conceptions of success.
25. That is why we are doing more to develop different peaks of excellence and encourage a variety of interests in our students.
a. Our school system is becoming more diverse and flexible.
b. We have been taking steps over the years to blunt the effects of streaming and allow for more fluidity in our system. In fact, we will be phasing out streaming out completely by 2024.
c. In its place is Full Subject-Based Banding, where secondary school students can pursue subjects at different levels, based on their interests and aptitude.
d. Hopefully, this will allow our students to better realise their potential too.
26. But the changes cannot just stop at the education system. We need to see broader change in our economy too. It still places too much of a premium on cognitive abilities – what we deem as “head” work – and does not value
sufficiently those engaging in other forms of work, such as technical roles which tend to be more “hands-on” work, or service and community care roles which tend to be more “heart” work.
a. We see this, worryingly, in the divergence between the starting pay for ITE, polytechnic, and university graduates.
b. The median starting salary for a university graduate is almost twice that of an ITE graduate. And this earnings gap increases over their lifetimes.
27. We are tackling this in a variety of ways.
a. We have already tightened our foreign worker quotas and increased our Local Qualifying Salaries over the last decade.
b. We have also uplifted the wages of lower-wage workers, through the Progressive Wage Model. This has resulted in real wage growth for our lower-wage workers over the past decade and will continue to do so for the coming decade. We are also expanding the Progressive Wage Model to more sectors and occupations.
c. We are also investing more to raise the quality of vocational instruction in our Institutes of Higher Learning by levelling up our ITE skills-based curriculum to give students deeper industry-relevant skills, and increasing the number of work-study
diplomas across sectors so that students can have a career head start after they graduate.
28. Beyond these moves, we must do more to recognise the value of “hands” or “heart” work across the economy. Many of these jobs tend to be in the local services sector, where productivity is generally lower than the
export-oriented industries. So there is a need for painstaking effort, industry by industry, to look at ways to re-design jobs and raise productivity; to upgrade skills, and to establish better career progression for workers.
a. For example, we have been doing this in the preschool sector, especially across all the government-supported pre-school centres.
b. Not just having better starting salaries for the teachers; but also a clearer skills and careers ladder for everyone in the preschool sector.
c. For example, some may become specialist teachers in fields like early intervention for children with special needs; or those with the aptitude and capabilities might take on leadership positions – to mentor teachers, develop teaching practices, or even oversee not just one centre but a cluster of preschools centres.
d. So this sort of work, what I have just described for the preschool sector, is something we must strive to do across all sectors of the economy.
29. If we can do all these, I am confident that we can uplift the wages of these industries over time.
a. The Government will do our part by investing in our people, and reducing the material gaps in wages and incomes between these different types of work.
b. Businesses must do their part too, by recognising the value of different types of work, re-design their business processes and jobs, and pay their workers well. The Government will support you in this endeavour, as we have been doing, for
example, through the Progressive Wage Credits Scheme. So even as we roll out progressive wages, the Government is helping to co-share the wage increases.
c. All of us as Singaporeans must do our part, and be willing to pay more and bear the higher cost of goods and services delivered by our fellow workers in these different sectors and occupations.
30. For many, wages is just one part of this debate. Respect and dignity matter equally, if not more.
a. We must move away from preconceptions that academic success should be prized above all others.
b. Instead, we must respect those who labour with their hands and hearts, and confer upon them the same status as other paths.
c. We must also give them opportunities to advance in their respective fields, and not pigeonhole them into specific tasks, or hold them back unfairly.
d. This will again require a fundamental mindset changes in our society – by employers in the way they hire, train and promote, and by each of us, in how we respect one another, regardless of our occupation or station in life.
31. Ultimately, our promise must be this: regardless of which path you take, as long as you work hard and continually upskill, you will be accorded recognition for your skills, given opportunities to advance, and be rewarded fairly for your efforts.
Conclusion
32. In my various Forward Singapore engagements so far, the same threads have consistently come up in describing the Singapore we want for ourselves and our children.
a. A place of opportunity, where people can aspire to exciting careers and jobs.
b. A place where everyone is assured that they will always be supported to realise their potential and succeed, especially if they fall on hard times; and
c. A place which values the contributions of all Singaporeans, regardless of who they are or what they do.
33. I have tried to sketch out some our plans to realise this vision this morning. And realising this involves not just the Government, but businesses, unions, and society too.
a. Some of these shifts will not be easy to attain. But if we work together, I am confident that we can expand the possibilities for fulfilment and success for every generation of Singaporean.
b. This is the great task of nation-building that falls upon our shoulders.
c. This is the Singapore that I hope to see in my lifetime.
34. I look forward to hearing your perspectives and suggestions on what more we can do, and I welcome you to participate actively in the Forward Singapore exercise. Let us work together to build a more vibrant and a more inclusive economy
for all Singaporeans. Thank you.
1Based on Ipsos poll conducted in June 2022