Tackling Singapore’s labour crunch

In a market where labour is scarce, wages rise. Workers who can, would move to sectors that pay better. Firms too may move - in search of lower-cost labour. Indeed, more than 60 per cent of SMEs in the recent survey by the Association of Small and Medium Enterprises (Asme) were thinking of relocating to neighbouring countries where labour, land and raw material costs are lower. Associate Dean of the SMU School of Economics, Professor Hoon Hian Teck noted that the migration and phasing out of companies that are unable to become more productive and less reliant on labour dates back to the late 1970s, when labour-intensive industries such as textiles made way for higher value-added ones such as pharmaceuticals.