Productivity growth only way forward to ensure better life, says PM Lee

SINGAPORE – The Republic has “maxed out” the easy ways of driving economic growth and the only way forward is to increase productivity, Prime Minister Lee Hsien Loong said.

“Productivity is very tough to do. And that is what we depend on now,” Mr Lee said when he was asked to elaborate on his worry — which he had publicly expressed on two previous occasions — about the economy in the next decade.

Mr Lee was speaking in an interview with Ambassador-at-LargeChan Heng Chee, which was televised yesterday. He noted that 50 years ago, Singapore started off by building factories and creating jobs to improve life for its people.

When full employment was reached, the Government looked to bring women into the workforce. After achieving some success on that front, the next step was to top up the local workforce with foreign workers. Then, policy-makers turned their attention to older workers, and sought to enable them to continue contributing to the economy.

“But that reaches a limit, too. What do you do? The only thing you can do is productivity. Work smarter, work better and deliver results, and improve our lives,” he said.

Professor Chan noted that “there are some people in Singapore, especially the younger people” who question the necessity of high economic growth, and wonder if the country can make do with “two per cent or oneper cent” growth.

Mr Lee replied: “If you go to one or two per cent growth, life is not getting worse, but life will not be getting better in the same way (as in the past).”

He added: “If you look at the countries in that position — Japan, theEuropean countries, America after the global financial crisis for some time — you get an angst, a fractiousness, a despondency, a whole gloom settles over the society. Why is it next year is not better than this year?

“We want so many things to be better — poor people to be less poor, healthcare to be improved, schools and housing to be improved. The one way to do that is to grow. If you do not grow, there is no way to make ourselves better.”

Noting that successive generations would want a better life compared to their predecessors, Mr Lee said: “But how can all our children have a better life than us, if once it reaches their generation, the economy is smaller than it was today?”

Mr Lee also stressed that raising productivity is not just about acquiring new technology, but helping companies, especially small-to-medium enterprises (SMEs), use the right technology, and schemes for training and subsidies, in the right way.

“You have to get the right gizmo, and it has to fit into a business which is the right business, and you have to know how to make it work,” he said.

He added: “Some mismatch and wastage cannot be helped, but overall we have to try to make sure that our training and investments deliver results. And if you look at specific companies, you can see that, in fact, they have been able to do better.”

For instance, restaurants are increasingly using tablets to take orders or creating electronic queues for tables,he noted.

“In practical ways, we can make things better. But to make it happen across the board and in the whole economy and, particularly, across tens of thousands of SMEs … that is a very tough job,” said Mr Lee.

With SMEs employing the vast majority of people here and contributing significantly to the gross domestic product, Mr Lee noted the impact of curbs on foreign manpower on these companies.

On the view that the Government could calibrate the inflow for different sectors, Mr Lee said: “So everyone has a good case, yet I am not able to sign a work permit for everyone who comes to me with a convincing story, so somehow we have got to live with a less than perfect situation.”

With the total workforce growing one to two per cent each year, Singapore would need productivity to grow at a similar rate to get three to four per cent economic growth per year.

“But if you ask me, on a sustained basis, for two to five years, if I could do that … that would be an outstanding achievement,” Mr Lee said.