Balancing Singapore’s industrial revolution

November 2, 2016 / By

As a society ages, a regulatory environment that incentivises productivity and supports technology is key to driving economic growth. Singapore’s population is ageing but how has the city state, known for its foresight in government planning, fared on the productivity of its land and human resources?

Over the last few decades, industrial landscapes across the world transformed dramatically. The invasion of technology into trade and commerce has impacted a multitude of business models. Robots are now taking over the industrial production line, assisting technicians in adaptive manufacturing, diagnostics, and repair works.

For Singapore, stellar growth in the manufacturing industry was supported by rapid expansion of the working population, particularly the foreign workforce. As the society started ageing, the finite size of its labour force was becoming a concern and social issues were surfacing from the over reliance on foreigners. To stay ahead, Singapore had to no choice but automate, innovate and allow technology to spearhead growth.

Mooted in the early 1990s, Singapore began focusing on industry clusters which promoted value creation. From the launch of the first National Technology Plan in 1991 to the recent JTC-Spring joint grant call for test-bedding of sustainable solutions, the government was steadfast in pursuing growth areas such as advanced manufacturing, information technology, and robotics. Under the JTC-Spring joint grant call, six clean technology small and medium-sized enterprises (SMEs), namely Omega Solar, Ecosoftt, HVS Engineering, vTrium Energy, Transkinect, and Sun Electric, were awarded SGD2.5 million to test-bed new technologies. In addition, the council for Skills, Innovation and Productivity (CSIP) was formed to keep our labour force competent, providing skills upgrade to complement these new industries.

Now, after more than two decades of pushing for economic value with less manpower, how has the numbers stacked up?


From 1995 to 2015, employment in the manufacturing industry grew a modest compounded annual growth rate (CAGR) of 0.72%. In conjunction, CAGR in the Value-Added Per Worker, a measurement of productivity, grew a healthy 3.71%. This suggests that with a lean labour force, the industry achieved higher economic value per worker.

Compared to other countries, Singapore seems to have fared fairly well. The Business Environment Risk Intelligence (BERI) Report 2014 ranked Singapore’s labour force highest in terms of workers’ productivity, ahead of United States, Taiwan and Switzerland. Many of these countries have likewise invested heavily in high value niche industries, as well as in the training and development of workers.

In its pursuit of better economic growth through innovation and labour productivity, has Singapore also balanced the usage of its land resources prudently?

The ratio of manufacturing industry output to the amount of industrial space used was SGD116.0 per square feet in 1995. Two decades on, land productivity grew 1.1% CAGR to SGD145.5 per square feet in 2015, suggesting increased land use efficacy.

Juggling land and labour resources will only become more challenging and there is a constant need to ensure relevant economic direction and policies. Going forward, Singapore, with its limited resources, will need to ensure that it stays ahead amid rapid changes during the Fourth Industrial Revolution to stay competitive.


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