SUSTAINABLE ECONOMIC GROWTH: HOW WILL IT AFFECT THE WAY WE WORK IN THE FUTURE?
Professor Tan Eng Chye, Deputy President and Provost, National University of Singapore
Faculty and Students from NUS, NTU, SMU and Junior Colleges
Ladies and Gentlemen
I am pleased to join you this evening at the Seventh MTI Economic Dialogue. It is an important annual forum to discuss economic issues with students, and recognise those who have produced outstanding pieces of research, and done well in their study of economics.
Let me start by congratulating this year’s thesis prize winners, Tham Ming Jie from NUS, Low Mei Xiu, Ng Xin Mu and Teo Wei Lun from NTU, and Teo Li Ting Amanda from SMU, for their outstanding research, including some on issues that are topical in Singapore. For instance, the NTU students analysed the impact of the Workfare Income Supplement scheme on the savings behaviour of low-wage workers. Such research is germane to our national focus on policy measures to ensure adequate savings for retirement, and to mitigate the impact of income inequality. I hope that such research will inspire you to thoughtfully evaluate our policy options through robust economic analysis.
I would also like to congratulate the economics book prize winners, Lin Rong Xian Timothy from NUS, Goh Hong Jun Shawn from NTU, and Tan Jun Wei from SMU, on your outstanding academic performance in your third year of studies. Well done everyone.
Economist Service Scholarship
This evening, we are also presenting the Economist Service Scholarships to three outstanding students who have demonstrated the aptitude and a keen interest to serve as public sector economists. My congratulations and best wishes to the scholarship recipients - Teo Ning Zhi Angelyn, Benjamin Toh Jun Hui and Ong Chong An.
The importance of productivity-led growth
Today, one of our most pressing challenges is to sustain growth and opportunities for Singaporeans, against a backdrop of tighter domestic constraints and rising international competition. I would like to share with you some perspectives on our efforts to achieve sustainable economic growth, and how it may affect the way we work in the future.
Economic growth leads to job creation and higher living standards for Singaporeans. Indeed, for much of our post-independence history, Singapore’s healthy economic growth has enabled Singaporeans to benefit from high employment rates and wage growth, while generating the resources to build infrastructure, fund education and healthcare, and bolster safety nets for vulnerable Singaporeans.
Today, our growth imperative remains as important, even as we face greater domestic resource constraints. Hence, our challenge in this and the coming decades is to improve the quality of our growth. By this I mean a pace of growth that may be moderate yet maintain verve in our economy, continue to create opportunities for our people, without putting undue strains on our resources and factor inputs. Much of our growth in recent times has been attributed to increasing labour inputs. But, given our demographic profile and population size, we cannot continue to do so. Instead, we need to train our sights on productivity growth as a key driver of our economy. Doing so will not only enable us to overcome our resource constraints, but also allow Singapore to grow sustainably, thereby bringing about better jobs, higher wages and improved living standards for Singaporeans.
But what does this mean for individuals like us? And how will it affect the way we work in the future, and the skills that are needed?
Students of economics will know that there are two fundamental sources of productivity growth – technological progress and human capital improvements. Harnessing these two productivity drivers will lead to profound changes in the way we work in the future.
Technology will be a key driver of productivity growth
Let us first consider technological change. In recent times, there has been much discussion on disruptive technologies such as artificial intelligence, robotics, driverless cars and additive manufacturing. Some of these technologies may seem distant, but many of them are already being piloted, including in Singapore. For example, Google’s self-driving cars have travelled more than 700,000 miles in California. In Singapore, the Land Transport Authority is working with the Singapore – MIT Alliance for Research and Technology, and NUS, to test a fleet of driverless vehicles. So too NTU and ST Kinetics. We can expect more of such game-changing technologies to become commonplace as human ingenuity pushes the frontiers of innovation.
How will disruptive technologies affect jobs? First, some jobs – even high-touch customer service ones – may be lost to automation. For instance, BMW uses artificial intelligence in its i Genius system to answer customers’ queries. The i Genius system is not only capable of interpreting words, but also the context and sentiment behind each question, and can reply just like a human being. This system has replaced the need for customer service officers to handle calls. Another example comes from the hotel industry, where robots have been used to handle/store luggage, reducing the number of concierge staff and allowing them to focus on customer-facing tasks that generate greater value. Let me show you a short video of how this technology has been used in a hotel (Yotel) in New York. It is not only functional but also a tourist attraction that captivates visitors to the hotel.
These innovations can eliminate menial labour-intensive tasks and raise productivity through automation; but they also threaten existing jobs including some at the middle and higher rungs of skill. In fact, researchers from Oxford University have estimated that 47 per cent of jobs in the U.S. could be automated within the next twenty years. Similar calculations done by Bruegel, a European think-tank, suggest that 54 per cent of jobs within the European Union could be lost to automation. In absolute terms, this implies that more than 180 million jobs in the U.S. and the European Union could be lost to machines.
Yet, the outlook is not all bleak. While technological advancements will lead to job losses, history is replete with examples of how disruptive changes have also created new and better jobs. The industrial revolution transformed manufacturing processes with the help of machines. It led to a multi-fold improvement in productivity, as factories were able to produce vastly more output than craft workers could ever manage. Even as craft workers were displaced in the process, others were employed to manufacture the machinery and operate the production lines. Wages and living standards also rose in tandem with productivity gains.
More recently, the information technology revolution of the 1990s resulted in the development of faster and more sophisticated machines, which in turn has enabled advanced production techniques and enhanced service delivery. The increased power of computers has led to the development of sophisticated robots to perform routine tasks in factories. But it has also catalysed our progression into the knowledge economy as information can now be found, retrieved and created far more quickly. To manage this information explosion, many high-skilled jobs in the IT sector have been created. For example, in the U.S. alone, the number of workers in IT-related occupations has doubled since 1997, to around four million today.
Another example is the development of additive manufacturing technology. One industry in which this technology can be adopted is aerospace engineering. In essence, additive manufacturing allows small, complex components used in aircraft engines to be stronger and lighter than those manufactured using traditional casting techniques. Indeed, Rolls Royce has announced that it is just a few years away from using 3D-printed parts in its aircraft engines. Beyond the aerospace engineering industry, we can expect additive manufacturing techniques to have a material impact on other industries in the coming years. With the wider use of additive manufacturing, the demand for engineers who are capable of performing higher-value jobs that involve component design and materials research will increase.
All these examples tell us that while technological changes can destroy jobs and change the way we work, they also create exciting opportunities for us, as consumers, workers, businesses and the economy. Hence, we need to respond proactively at the level of the individual, the corporation and the Government. At the economy level, the Government is actively promoting R & D and investments in new sectors that have the potential to create high-value jobs for Singaporeans. At the same time, companies will have to adapt their processes and business models to benefit from the new technologies, and remain competitive. Lastly, at the individual level, we will need to embrace change and equip ourselves with the requisite skills to capture the new job opportunities as they arise.
We need to continuously augment our hard and soft skills
From a macroeconomic perspective, improving the skills of our workforce will enhance productivity, boost competitiveness and growth, and raise overall wage levels. At an individual level, improving our skills helps us to do better in our jobs, enjoy higher pay, while helping us to capture new job opportunities.
Hence, it is critical that we invest significant resources in our pre-employment training and continuing education infrastructure, to ensure that there are many pathways in place to help Singaporeans acquire and sustain their skills. For a young Singaporean, one possible pathway is to acquire a good educational qualification at the degree, polytechnic or ITE level, before joining the workforce. However, it is important to recognise that a good educational qualification alone is not a guarantor of success at work. We need not just the theoretical knowledge and technical skills acquired through school and continual learning on the job, but also the ability to apply these skills and knowledge to create value.
Therefore, it is important for young Singaporeans to realise that it is not just hard skills that will be in demand in the future, but also soft skills like the ability to work in teams and across disciplines – attributes which are less susceptible to automation but essential for productive human interaction. In fact, in an advertisement for a data scientist position, Google described the ideal candidate as someone who can do more than just crunch numbers, but is also able to work in diverse teams and mentor people.
Like Google, many employers seek both hard and soft skills in their workers. But what type of skills do employers value more? We polled students over the past week, asking them if they think employers value “theoretical training in discipline” more than soft skills. Most of you, about two-thirds, believe that soft skills are more important. You would be glad to know that this is in line with what employers think. A recent global survey[1] found that employers indeed rate soft skills such as “work ethic”, “teamwork”, and “creativity” as being more important than “theoretical training in discipline” for their new hires. While technical skills and knowledge are still essential, employers increasingly require their workers to be able to work in teams with members from diverse backgrounds and nationalities, have a positive work attitude, and solve problems innovatively.
Of course, this global survey is a snapshot of what employers think currently. Given rapid technological changes and the emergence of new industries, the relative importance of different skill sets may change over time. For instance, the advent of 3D printing may open up a world of opportunities for 3D printing designers, raising the premium on creativity relative to other skills.
But what does this mean for us? First and foremost, we must recognise that technological changes will cause the obsolescence of jobs, even some which involve higher order skills. We must therefore adopt a nimble mind set, and strive to keep our knowledge and skills current through continual learning.
Second, apart from upgrading technical skills, we must also focus on acquiring soft skills. A good blend of both skill sets will enable you to take on good jobs that are emerging in new and exciting industries. Third, you should seek out new experiences that take you out of your comfort zone. An overseas posting in a developing country can, for example, help you appreciate difference in culture and operating environments, work better with people of different nationalities, and better understand a company’s global strategy.
A collective effort by workers, businesses and governments to continually deepen our technical competencies while acquiring complementary soft skills, we pave the way for us raise our productivity, and be well-placed to seize new opportunities.
Conclusion: change will become part-and-parcel of work
Let me conclude. We can expect our future work environment to dynamic because of domestic challenges as well as external competition. These forces will change the way we work, and the skills that we need to stay relevant and succeed. A case in point is the impact that our quest for productivity and quality growth will have on our economy and jobs. We must remain nimble, by nurturing both hard and soft skills, in order to seize the opportunities such changes can bring, and not succumb to the threat of job obsolescence.
This requires the collective will of our workforce, businesses and the Government. Workers, employers, and education providers must come together to ensure that our skills remain relevant and our industries remain competitive. Only then can foster quality growth and better living standards.
Thank you.