By Chris Kuan
The Monetary Authority of Singapore (MAS) highlighted in its Macroeconomic Review that the number of job mismatches has reached the level last seen in 2008-2009 and then pontificated “Notably, workers should equip themselves with the necessary skills to fill jobs that are currently available and will be in demand in the coming years.” It went on to outline the type of jobs that are in demand.
I have no qualms accepting the premise that workers have to retrain and re-skill to keep up with the demands of economic change. But necessary initiatives like Professional Conversion Programs and SkillsFuture Credit become wasted due to the distortions in the labour market caused by the easy access to cheap foreign labour.
Retraining and re-skilling takes time and money, which comes from the workers including the subsidies from the government because these come from taxes. Companies are not going to wait for retrenched workers to retrain and reskill when a cheap option is always available at a click of Employment Pass application.
In other words, there is very little if any “friction” in the labour market where foreign labour restrictions and stronger workers’ rights would have forced employers to retrain and re-assign their workers as the preferred option rather than redundancy. Those needing workers need to plan and be patient in filling their vacancies.
Certainly one can argue that labour market friction works against labour market efficiencies but there has to be a trade-off between friction and efficiency in which some efficiency is sacrificed for the sake of providing better job matches and giving time for retraining and reskilling to take effect. This improves productivity as would the adoption of technology forced upon businesses caused by the same labour market friction. Besides labour market efficiencies does not necessarily translate into productivity especially when cheaper but lower quality labour is used.
The reality which has been for the past 15 years is that the government’s macroeconomic solution to uncertainties is to liberalise the economy to create lots of jobs, does not matter kind of jobs or that most are low paying and never mind if wages are suppressed as a result.
This is not the kind of environment where tax payer monies spent on various initiatives will go anywhere fast, let alone improve the abysmal productivity levels. As usual, all the talk about re-skilling and being relevant to the future are nice sounding euphemism that put the onus squarely on workers if they cannot find the right job matches or if they are unwilling to accept low pay.