The challenges of state intervention in Singapore’s youth labour market

• Published date: 14 March 2018
• Date: 14 March 2018
• Pages: 138-150
• DOI: https://doi.org/10.1108/EDI-10-2017-0211
• Author: Peter Waring,Christopher Vas,Azad Singh Bali
• Subject Matter: HR & organizational behaviour,Employment law,Diversity, equality, inclusion

The challenges of state

intervention in Singapore’s youth

labour market

Peter Waring, Christopher Vas and Azad Singh Bali

Murdoch University, Perth, Australia

Abstract

Purpose –The purpose of this paper is to assess the efficacy of the policy measures to encourage young

Singaporeans to pursue employment in the manufacturing sector while at the same time discouraging the

sector’s traditional dependence on low-cost foreign labour. In doing so, the paper sheds light on the challenges

faced by small and medium enterprises (SME) as well as the less than optimum impact the policy rhetoric has

had on redirecting the aspirations of young people away from tertiary qualifications attainment and towards

vocational skills development.

Design/methodology/approach –The paper draws on primary survey data of 222 manufacturing firms

and in-depth interviews with 20 SME leaders in Singapore.

Findings –The paper argues that despite the government’s policy efforts to encourage the employment of

young Singaporeans in the manufacturing sector, the impact has been negligible. Even with moves to

increase the transaction costs of employing foreign workers, the findings indicate that SMEs have not

changed their staffing policies. Indeed, the results lay bare the low cost-low skill/low productivity trap that

most SMEs now find themselves in. The government’s efforts to discourage the pursuit of tertiary

qualifications in favour of vocational qualifications are unlikely to succeed.

Originality/value –The value of this research is fourfold. First, it exposes the difficulty of policy

overcoming path dependency. Second, it sheds light on the need for government to rethink its policy approach

in how best to re-tool human capital for traditional industry sectors like manufacturing. Third, the results

show that there is limited efficacy in simply increasing transaction costs and altering rhetoric to discourage

attainment of tertiary qualifications unless vocational employment is adequately remunerated. And finally,

the results indicate that firms in the manufacturing sector need to embrace new business models, practices

and technologies that are reflective of the digital era to be able to attract youth.

Keywords Employment, Graduates, Labour market

Paper type Research paper

Introduction

Singapore’s spectacular economic performance over the past five decades is universally

recognised as remarkable and often cited as a model for other developing nations to follow

(Lim, 2015). In recent times though, Singapore’s economic record has been blemished by

anaemic productivity and a manufacturing sector squeezed by competitive and lower cost

producers in other parts of Asia and especially China.

For its part, the Singapore Government has announced renewed efforts to restructure the

economy and lift flagging productivity through multiple complementary policy initiatives. It has

not escaped the notice of the authorities that those sectors with especially lack lustre productivity

are also those with the highest use of foreign labour (Shanmugaratnam, 2013). Singapore’shigh

dependence on foreign labour pre-dates the colonial era and has persisted as a result of the

availability of cheap foreign labour and the constraints of the domestic labour market.

To wean firms from this dependence, the government has sought to both increase the

cost and reduce the supply of foreign labour. At the same time, they have encouraged

the adoption of automation in a variety of sectors while also encouraging younger

Singaporeans (school leavers and graduates) to enter into industries and occupations

previously dominated by foreign workers. These industries (such as manufacturing,

construction and food and beverage) are critical contributors to the local economy but are

often perceived to be undesirable places to work by the younger generation of Singaporeans.

Equality, Diversity and Inclusion:

An International Journal

Vol. 37 No. 2, 2018

pp. 138-150

© Emerald PublishingLimited

2040-7149

DOI 10.1108/EDI-10-2017-0211

Received 10 October 2017

Revised 1 December 2017

Accepted 10 December 2017

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/2040-7149.htm

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