PM Lee Hsien Loong at the Opening of National Productivity Month 2014

Mr. Teo Siong Seng, Chairman of the Singapore Business Federation
Dr Robert Yap, President of the Singapore National Employers Federation
Members of the National Productivity and Continuing Education Council
Distinguished guests, ladies and gentlemen

Very happy to be here to open the National Productivity Month

PRODUCTIVITY THEN

For a very long time, productivity has long been fundamental to Singapore’s prosperity. In fact, we started promoting productivity more than 30 years ago. The focus then was on equipping our workers with relevant skills. We set up the National Productivity Centre (NPC) under EDB and later upgraded it, and it became the National Productivity Board (NPB) in 1972.

In 1981, then Prime Minister Mr Lee Kuan Yew launched a national effort. He was concerned that our productivity levels were only one-third that of advanced economies. He said, “Workers here (in Singapore) were not as proud of or as skilled in their jobs compared to the Japanese or the Germans”. He began a National Productivity Movement that year, and he personally launched a Productivity Month every year for quite a number of years after that.

Many of you here will be old enough to remember Teamy the Bee - the mascot which stood for diligence, teamwork and innovation, and the Quality Control Circles (QCC) and Work Improvement Teams (WITS) which we spawned and which popularised the idea of productivity at the work place from the bottom up.

As Minister for Trade and Industry, I spoke at the opening of one Productivity Month, in 1987. In my speech those many years ago, I quoted a letter by the former Chairman of the Japan Productivity Centre, Mr Kohei Goshi who had written to Mr Lee, the prime minister. Mr Goshi was a deep believer in the importance of productivity, and one of the key figures in fostering a strong productivity culture in Japan. He was then already an old man but he was still passionate and still pursuing productivity. He lived and breathed it. So I quoted from his letter.

The following year, 1988 Mr Lee Kuan Yew opened the productivity month again and he decided to quote the letter once more because he explained that when I had quoted the letter before, the press had not paid attention, so he decided to quote it himself. Since it has been 25 years since then, in fact longer, and the quote is as relevant as ever, let me share it with you for the third time.

Mr Goshi described the productivity movement as a marathon without a finish line and he wrote: “All world class marathons are designed to test the athlete’s endurance and will to win. Flat courses are inevitably followed by ‘heart break hills’ and any good athlete knows that you cannot maintain the same pace throughout the marathon if you expect to win” – which is still true today.

On the importance of upgrading workers, Mr Goshi quoted an even older saying and it goes back to the Chinese Philosopher Guanzi 管子 , who lived 2,500 years ago. Guanzi said: “When planning for one year, there is nothing better than planting grains. When planning for ten years, there is nothing better than planting trees. When planning for a lifetime, there is nothing better than planting men.” In Chinese, “一年之计，莫如树谷；十年之计，莫如树木；终身之计，莫如树人”.

Mr Goshi’s words distilled from a lifetime’s experience in the Japan Productivity Centre. They are still relevant today and they remind us to keep up the effort to increase productivity, year after year.

PRODUCTIVITY NOW

What has changed since then till now is our economy. We have made a lot of progress on productivity - our workers are better-skilled, and our economy is more developed. We are reaching a different stage of economic development and shifting to a slower pace of growth – instead of 6% a year, we are aiming for about 3% a year, more typical of the developed economies.

We have less free land available, though we can still create and reclaim more space, as we have done with Jurong Island and the Jurong Rock Cavern, and as we intend to do by moving Paya Lebar Airbase to Changi, and moving PSA’s container terminals from Tanjong Pagar to Tuas. Our manpower situation is tighter, though we can still help more women to continue working in the workforce after they have started their families. We can also encourage more older people to stay in the workforce and work longer.

In our new situation, productivity becomes more important, not less. Not only is it important to grow our economy, but it is also crucial for raising the incomes of workers. In the short term, wages may rise by themselves in a tight labour market. But in the long term, wage rises can only be sustained through higher productivity. Therefore we have embarked on our next phase of the productivity drive - continuing to upgrade individual workers but also emphasising raising productivity at the industry and company level.

Our strategy to improve productivity has three prongs. First, we do our best to support companies in upgrading productivity, be it in investing in technology, training workers or streamlining operations. We are incentivising firms to invest more in productivity and skills, through tax benefits and credits, like the Productivity and Innovation Credit (PIC), across the board and in every sector.

At the same time we have many schemes tailored to companies in individual sectors and industries, which companies can tap on to make such productivity improvements, to innovate and to upgrade their workers. I am happy to see a steady increase in the take-up of these schemes.

Secondly, we are controlling foreign worker inflows so that we put pressure on companies to upgrade their workers rather than simply hiring extra bodies. But we still give companies enough access to foreign workers to complement your Singaporean workforce, because if we allow in too few foreign workers, or freeze their numbers, some businesses will not survive, especially SMEs, and many Singaporean jobs will also disappear.

The latest manpower numbers show that our efforts are bearing fruit. Foreign worker growth has slowed significantly – it is the lowest since five years ago. Now it is now at a more sustainable level, and about where we want it to be. Real wages are rising – median wages are going up and more importantly wages at the lower end are going up too. As I said last week, I do not expect any further major measures to tighten our foreign worker numbers. We will give companies time to adjust to the measures and to re-tool themselves. At the same time we will continue to monitor this closely, to ensure that we stay on track in avoiding any over-dependence on foreign workers.

Thirdly, we are treating productivity as a national effort, where everyone has to play their part. Companies must adopt a productivity mindset and not be afraid to implement technological solutions or change business processes to improve efficiency. Employers must seek constantly to improve their operations, recognise their workers’ skills and value and train workers. Education and training institutions have to equip workers with the relevant skills. Workers themselves must hone and upgrade their skills, as well as help to identify problems at work and improve work processes. They need to have that will to improve themselves. Of course, the Unions are playing their part - encouraging workers to take advantage of the opportunities to upgrade. As a whole our society must celebrate individuals for their passion, endeavour and skills, not just for their qualifications.

Outside the workplace, we have to be open to change – Singaporeans individually and Singapore as a society. Because productivity requires change in mindsets not just in businesses, and workers, but also mindsets of customers who have to be prepared to accept new business models, including for example self-service formats.

PRODUCTIVITY IN THE FUTURE

I know that many businesses and workers have been trying hard to cope with change and indeed it is hard. But we are mounting a national effort, and we are tackling this comprehensively. If we look at our productivity journey over the past 50 years, we can be optimistic that our restructuring journey will be successful.

We do have some challenges to overcome, for example in changing social attitudes that over-value paper qualifications and we need to create more diverse pathways upwards – I spoke at length about this at my National Day Rally. Hence, we have set up the SkillsFuture Council, chaired by DPM Tharman, to focus on building skills-based career progression for all Singaporeans. The SkillsFuture Council will also take a deeper approach at the sectoral level, working with employers, unions and training institutions to develop the skills that we need for the future.
In several sectors, progress in upgrading productivity has been slow, for example in construction and also in some service industry. Construction continues to heavily rely on foreign workers – who make up close to one-third of our foreign workforce in Singapore. In F&B and retail, our service skills and efficiency are still significantly lower still than say in the US.

But there are also encouraging signs even there. Some sectors are steadily upgrading themselves, for example Precision Engineering, Transport Engineering and Finance & Insurance have had good productivity performance. Even in the slower sectors, firms are changing. Take in F&B, one company, Oromo Coffee – it is one of many cafes in Singapore in a competitive market. They wanted to increase sales without increasing their headcount. They redesigned their service model, segregated the customer types. Regulars can do direct ordering because they know what they want. For the rest, they designed a dedicated ordering app with customisable drinks, for those with more time and want to explore the menu, and with self-service collection. There are new and enhanced visual “touch-points” with revamped menu. The result is they have reduced ordering and billing time significantly; and most importantly, the business turnover has gone up by 80%, nearly doubled without any additional staff costs. I presume that the company is doing well and I think their lessons can be learnt by other companies too.

Innovation does not have to be rocket-science, but companies must be willing to relook at how things are done. We will continue to work with employers and unions in all industries to raise their productivity – not just through technology, but also by transforming business processes, management, and business models.

I am glad and grateful that the Singapore Business Federation and Singapore National Employers Federation have taken the initiative to restart this Productivity Month and to spread the message amongst employers that productivity is crucial. I am also glad that the unions are solidly behind this effort. For example, the NTUC is operating the Devan Nair Institute for Employment and Employability. Together with the Lifelong Learning Institute, the Devan Nair Institute will help workers and companies to keep themselves updated and relevant. The Government will continue to work with our tripartite partners to invest in our people and to create new pathways upwards for Singaporeans.

Productivity is a long haul, a marathon without a finish line, but so long as we have confidence and keep working at it together, we will stay in the race and ahead in the race. Let us build on our momentum and make steady progress in transforming our economy for many years to come. Thank you very much.

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