Commentary

Shift all gears, not just some

Shift all gears, not just some
Tourists in Singapore’s CBD. Previously judged an important industry, tourism is now low value-add compared with knowledge-based sectors like finance. Photo: Bloomberg
Published: March 26, 3:58 AM
Updated: March 26, 4:00 AM
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Hitherto, the pronouncements by the Government on its economic plans, and what it will take to realise those goals, have been addressed to private sector firms and to private sector labour.

They are being encouraged to become more productive, more skilled and move into more valued-added activities.

Deputy Prime Minister Tharman Shanmugaratnam has spoken in terms of the need to “shift gears”. I make the case that such a shifting has to occur in both private and public sectors.

As argued in my first article yesterday, we should shift from an intense emphasis on value-added gains to an emphasis on value creation. Value creation is about human capital, since ideas come from people not machines. In a scarce labour environment, we need to allocate our limited human capital effectively to avoid a crowding-out effect or other distortions.

PRODUCTIVITY IN GOVERNMENT

The public sector is the largest employer of total labour in Singapore and of resident labour by far.

According to the Manpower Ministry, in 2011, the total size of the labour force was 3.327 million, while the size of the resident labour force was 2.08 million. The public service sector formed approximately 3.95 per cent of the total labour force but 6.3 per cent of the resident labour force. This is before including those serving in the military.

This figure is low compared to many other advanced countries which typically have public sectors exceeding 10 per cent (sometimes much more) of total employment.

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