Budget 2017: How does the economic landscape look like?
The current budget will take place in an environment that is politically volatile and economically weak. Businesses face uncertainty and workers have to get busy re-training to keep up.
For a start, it would be quite certain that this Budget would be about economic fundamentals. “The last few Budgets were all about structural changes to Singapore. It was about how to keep Singapore continue to be relevant,” said Lenon Lee, a tax partner at PWC.
Central to the economy would be the the companies that keep the citizens employed and contribute to the GDP. Companies involved or related to the oil industry have taken quite a bad hit last year. Experts agree that this will continue to persist through 2017. Tax reliefs will be useful to companies these years, especially the smaller ones.
“A big part of the Singapore economy is made up of SMEs. They make up 50% of our GDP and hire up to 90% of employment. In order for SMEs to grow, have to think about how to encourage them to innovate”
Encouraging innovation is set to be the backbone of the economy. Funding can go to growing incubators, investments and even lowering the cost of infrastructure that can be barriers to growing exciting new businesses. “Let’s look at chosing the local champions, the next industry and invest in those industries” says Lennon.
Companies and businesses also have to re-think their hiring needs and priorities, especially in a climate of tightening labour regulations. One of the mindset changes is that of hiring for grades and/or skills.
When asked if employers hire on skills or grades, Kai, a recruiter with a multinational firm has this to say, “Some do (hire on grades), this is part of an older mindset”. As more foreign investors setup shop in Singapore, along come people who bring a wider view of the world. Hiring based on grades alone is not necessarily good for corporate growth.
“We grew up in a very small island and we’re used to seeing things from this perspective”, says Ming Hui, a local entrepreneur. “If i’m hiring a young staff, i wanna know have you excelled in extracurricular activities such as organising school camps and so on. I don’t want a straight A student who hasn’t done much apart from study.”
The current market is one that demands a worker have all sorts of skills to survive. This is one of the key recommendations in the Committee on the Future Economy report made recently.
Where once the focus was on meeting industry-specific demand for skilled labour, workers of the next generation need to contend with faster changes in the labour force, more disruption and greater uncertainty in the face of more powerful technological advancements.
One group of workers that are vulnerable to technological advancements would be matured workers. “They (the mature workers) need to upgrade themselves making themselves relevant for the digital age”, said Lennon.
Back to work women also form a large and important component of the labour pool. Technology can help this group of workers get back to work without compromising on the family.
“There are mothers who would want to care for children and yet want to stay engaged with their professions”, said Kai. “Some want to do this on a part time basis, however they struggle to find such roles”.
There are some shifts that may be required when considering hiring back-to-work women. Employers ought to understand that there will be some give and take; you won’t get someone to sit at the office all the time (indeed there is no need to) and employees must also understand that there may be some monetary tradeoffs.
In both the cases of back-to-work women and mature workers, perhaps what the government can do, is to co-fund the salaries of these categories of workers or provide tax relief to encourage companies to widen their hiring pool.
In all – 2017 would be a very interesting year to understand the Budget debates. It is set amidst political uncertainty, a shift in global diplomacy, more protectionism and uncertain international economy.
To watch the full conversation between Kai, Lennon and Ming Hui, click here: