Progress Singapore Party’s (PSP) Francis Yuen said that it’s crucial for the Government to offer incentives to companies so they localise hiring, and this will then raise productivity level.
Mr Yuen, who is PSP’s Assistant Secretary General, said this on Thursday (22 October) while responding to a question asked at an online forum hosted by the Institute of Policy Study (IPS).
The moderator of the forum, who is IPS’s Deputy Director of Research Gillian Koh, asked Mr Yuen to share his thoughts on how Singapore can raise productivity.
As someone who had in-depth experiences in heading global companies like Honeywell, Ingress Rand and Hong Leong, Mr Yuen started off by acknowledging that Singapore definitely needs foreign talents that it does not have, as well talents that will cross-fertilise ideas in order to challenge locals to move to the next level.
“We do need talent that we do not have and we all need real talents that come in to cross-fertilise ideas so our own talent can be challenged to improve to a different level,” the alternative party member said.
However, he added that foreign talents should not be brought in solely because they are cheap labour, and this according to Mr Yuen is “wrong”.
“But it should not be a system where foreign workers are brought in because they are cheap, therefore it is expedient for business to lower their cost based on the fact that they are cheaper to employ. This is wrong basis.”
If that’s not all, Mr Yuen also believed that it’s good to use the “carrot and stick” approach.
“In my own experience, when I was overseas running Honeywell… one of the principal factors is localisation. The Government didn’t tell us to localise, we made it a point to localise all the position,” he said.
He added all the Vice-Presidents and Directors were “trained consciously” to move forward as that’s the company’s driving factor.
“You don’t have to tell them because it’s costly to employ foreigners who are not passing down the skills to the next level,” Mr Yuen explained.
As such, the PSP member pointed out that the Singapore Government has to think on how to incentivise companies to localise as this method is better than trying to ensure that companies make sure their foreign talents transfer skills to locals.
However, Mr Yuen acknowledged that there would be a certain tension with such a measure.
“Of course there is also this tension between being attractive for companies to come in…because of the cheaper costs of producing, and being expensive to stay because if you localise, your labour costs will climb,” he stated.
Additionally, Mr Yuen also said that in order to increase productivity, companies have to have a conscious mindset to drive productivity.
“A lot of foreign companies drive it because of this mentality of continuous improvement. If we have that kind of mentality, then workers themselves will come forward to make the processes much more efficient,” he noted.
He went on to say that if productivity is increased, then the company can save costs and pass it down to the workers to ensure they get higher wages. This will also lead to higher morale.
PAP’s Rahuyu Mahzam says Government is offering incentives to localise hiring
Commenting on Mr Yuen’s point, People’s Action Party (PAP) Rahayu Mahzam, who was also one of the speakers at the online forum, said that the Government is indeed offering incentives to promote localisation but companies remain fearful.
“I think in terms of productivity, I completely agree with Francis. This is the mindset that we need to get our companies into because they really need to look at how they can be more efficient. Which is why we embarked in the Industry Transformation Maps (ITMs) because it is very sectorial dependent – different sectors do it differently and they to look at it differently,” she said.
She added, “But there has been a little bit of inertia on the part of the companies because it’s not easy changing. So what the Government does is to give incentives with productivity grants, tax rebates to allow for them to invest on this. But it’s still work in progress and we need to continue to encourage it.”
Moreover, Ms Rahayu, who is Parliamentary Secretary for Health, said that one way that the Government is pushing companies to hire locals is to ask them if a local will be able to fill the position, and not a foreigner.
“Every time, now especially, when a company wants to extend their Employment Pass, they are asked to see if that skill set can be served by a Singaporean. And we have people that we will match them with.
“MOM will look at helping and supporting them, actually giving them grants. SGUnited Mid-Career package actually goes to that (where) if you hire Singaporeans, you get benefits. So that’s what we have been trying to do but it’s really the inertia and fear in the companies. That’s something we need to help (them with).”