The Singapore economy seems to have entered a new normal of low and slow growth. There are more out-of-work residents and, last year, those jobless for at least 25 weeks took longer to find work as compared with the previous year. Business sentiment has softened and small and medium-sized enterprises (SMEs) have quite understandably been more adversely affected than multinational corporations (MNCs).
The cause of such a subdued economy is more structural than cyclical in nature as the Government has painstakingly engineered a productivity-driven revamp of the labour market, but old habits die hard and it takes time to change human resource management and work behaviour.
Meanwhile, in the Budget statement on Monday, Finance Minister Heng Swee Keat made clear the Government’s intent to lend financial support to seven broad strategies tabled by the Committee for the Future Economy(CFE) to improve the longer-term resilience of Singapore’s highly open city-state economy. This is taking place amid a challenging external environment of rising protectionism against global trade, disruptive change due to rapid technological progress, and heightened geopolitical tension.
Dr Tan Khee Giap and Mr Gareth Tan Guang Ming are respectively co-director and research associate of the Asia Competitiveness Institute at the Lee Kuan Yew School of Public Policy, National University of Singapore.
This article was first published on The Straits Times on 22nd February 2017.