Breaking down Singapore Budget 2019: more help for talent and companies to cope with disruption
Singapore announced its 2019 Budget, which is an annual revised government revenue and expenditure projections for the current financial year, as well as planned revenue and expenditure for the upcoming fiscal year, on Monday.
Announcements include Singaporeans receiving a Bicentennial Bonus, more help with healthcare costs and a Merdeka Generation Package for those born in the 1950s and lived through the independence struggle.
In addition, finance minister Heng Swee Keat revealed the government is setting aside S$3.6 billion ($2.6bn) to help workers to thrive amid industry and technological disruptions, while the remaining S$1bn will go towards helping firms build deep enterprise capabilities.
Sandie Overtveld, the vice president for the Asia Pacific at Zendesk, a customer service software company, explains to The Drum the government is doing this because as digital transformation becomes more widely adopted, technologies such as automation and artificial intelligence will start to make some of the tedious tasks obsolete.
For example, in the customer experience (CX) space, consumers are starting to rely more on self-service support, and are more comfortable interacting with chatbots to get answers to basic enquiries quickly. As a result, customer support agents are now focused on helping customers resolve more complex issues that they cannot answer or solve themselves.
“This means Singaporeans will need to look at how they keep upskilling in order to stay competitive in a market that values more highly skilled workers,” adds Overtveld.
Businesses like e-commerce platform Lazada believe the new initiatives will help both local businesses and workers learn core digital skills and create more opportunities for the local workforce, especially for those hungry to evolve but who are lacking the resources to upskill successfully.
James Chang, the chief executive of Lazada Singapore says he also see a huge opportunity for SMEs to harness digital technologies in order to elevate their businesses to the next level.
“Lazada has also been incorporating new models to meet increased e-commerce demands, such as partnering with IMDA as part of the Locker Alliance Network, a collaboration that will provide access to collection points within 250 metres of any HDB residential block islandwide,” he tells The Drum.
Abhijeet Mukherjee, the chief executive of APAC and Middle East at employment website, Monster, notes that as Singapore solidifies its position as the region’s digital hub amidst a rapidly evolving technological landscape, it needs to take steps to prepare its workforce for this challenge.
He also points out the demand for high-skilled technology experts has been consistently rising all of last year.
“According to the Monster Employment Index, which is a monthly gauge of online job posting activity, the demand for technology professionals in Singapore witnessed a 23% year-on-year growth in December 2018,” he tells The Drum.
“However, the supply of adequately skilled professionals in the workforce does not currently meet the demand, leading to a skills gap in the workforce. The government’s decision to double-down on efforts to refresh the skills of the Singaporean workforce is a timely step to tackle the daunting reality of a talent crunch.”
Overtveld welcomes the move by the government to invest the remaining S$1bn towards helping firms build deep enterprise capabilities. He says it is extremely heartening to see strong government support for assisting local enterprises – particularly small medium enterprises (SMEs) – to grow their enterprise capabilities with new programmes.
New programmes include the Co-Investment Fund, Enterprise Financing Scheme, Scale-up SG programme and the Innovation Agents programme, on top of existing ones like the SME Working Capital Loan scheme and SMEs Go Digital.
He explains this is because, in today’s global marketplace, the ability to adopt new ways of thinking and create new innovations is critical to remaining competitive.
This is particularly critical for the SMEs that are driving Singapore’s ongoing economic growth, which some sources estimate make up 99% of all enterprises and an employment rate of 65% of all workers in Singapore.
“The key to success will be ensuring ongoing collaborations between government agencies and private organizations to identify industry trends, understand their implications, and work more closely together to mitigate the risks and amplify the opportunities,” says Overtveld.
Agreeing with Overtveld, Lazada’s Chang adds that as online and mobile platforms have changed the way consumers shop, and retailers must pay attention to this shift in consumer behavior in order to adapt.
This means developing capabilities that involve digitizing their business against a backdrop of the booming e-commerce industry. This is especially important for Lazada because the number of sellers on the platform has doubled in the last year, and those sellers need tools that help them understand how their business is faring online.
Chang says in order to provide key capabilities such as data analytics, personalizing customer experience, social media marketing to local businesses looking to increase their knowledge of e-commerce, Lazada has put in place partnerships with Singapore Institute of Retail Studies and Institutes of Higher Learnings to develop relevant courses covering different aspects of e-commerce to fully equip local SMEs.
“With the additional financial support from the government in the fiscal year 2019, businesses will be able to move more confidently forward with their plans to digitise and ensure their teams have the skills they need to be successful in the future,” he adds.
Will having lesser foreign workers have an impact on businesses?
Minister Heng also announced that the government would tighten the foreign workforce quota for the services sector. The maximum number of foreign workers allowed to be hired in relation to the company’s overall workforce will be reduced from 40% to 38% in 2020 and to 35% from 2021.
Mukherjee predicts the slashing down of the foreign workforce quota will definitely cause some difficulties in the services sector in the short-run as businesses struggle to upskill local workers. He says they will have to alter their processes in order to keep up with the changing manpower structure.
“However, this step will likely enhance productivity in the long-run by reducing dependence on foreign manpower – a necessary step for the industry to sustain itself amidst a declining population,” he explains.
Mimrah Mahmood, the regional director of media solutions at Meltwater, a media and business intelligence company, points out manpower, especially within the services sector, has always been a complex issue in Singapore.
With this year’s budget announcement, he says it is clear that the government is taking bigger steps into addressing the issue at its root – the local workforce. He feels the allocation of a substantial budget to the reskilling of local employees, allows businesses to play a greater role in upskilling local talent.
“In addition, grants for investment in deeper enterprise capabilities align well with the nation’s goal to transform into a leaner workforce,” he explains.
“Adoption of technological solutions like AI and automation will immensely help to offset manpower traditionally required to perform labour intensive tasks prevalent in the services sector.”
“In the long run, businesses that successfully overcome the limitations of the quota by grooming talents and set in place business processes backed by data and automation will be in a better position to weather the conditions of a challenging job market.”
To support firms in adjusting, the 70% funding support levels for the Enterprise Development Grant and Productivity Solutions Grant will both be extended beyond their original expiry dates to March 31, 2023.
Overall sentiments of the Budget
According to social media monitoring firm Digimind, there were 2,791 public mentions about the Budget which garnered 168,288 interactions. The number one topic of discussion around the Budget focused around the reduction of quota for foreign workers in the services sector.
Referring to stats from Meltwater, Mahmood says the annual Singapore budget announcement never fails to get people talking, and this year is no different. Social sentiments suggest that the budget announcement was well-received by Singaporeans, generating over 29% positive sentiments and 12% negative sentiments online.