Productivity improvements, not manpower rises, should fuel growth: Minister

Despite the dire productivity levels, Manpower Minister Lim Swee Say said yesterday that the Republic’s economy must continue to overhaul itself so that growth is fuelled largely by productivity improvements instead of manpower growth.

He added that productivity growth has to account for two-thirds of economic expansion — traditionally, this made up about a quarter, while manpower growth accounted for the rest.

“As we slow (down) manpower growth, we should not let it become the limiting factor of our economic growth. So we should focus on upping productivity,” Mr Lim said.

“For the longer-term sustainability, we must strive for this outcome of a strong Singaporean core and we must try to make smarter use of the foreign workforce in Singapore.”

While this would mean slower economic growth, Mr Lim reiterated that it would be of “better quality”.

Latest economic data released last week by the Ministry of Trade and Industry showed that labour productivity dipped 0.6 per cent in the first three months of this year — the fourth straight quarter of decline, prompting some economists to raise doubts over whether the Republic can attain the productivity levels required for sustainable growth. VALERIE KOH