Singapore: economic growth and HRM HR Management

As we noted earlier in this chapter, Singapore is one of the first-tier economies in South East Asia, along with Japan and others. It has witnessed remarkable growth in the past 35 years, and between 1965 and 1980 its GDP growth rate averaged 10 percent. Since 1980 the GDP growth rate has fallen slightly below 10 per cent, although the recessions in the mid-1980s and recently have hit the economy hard. Much of this long-term growth has been put down to the economic strategies of the government of Singapore (Aryee, 1994; Teen and Phan, 1999). Table Samsung’s ‘new HR policy’

Singapore is a small state with a population of 2.8 million, and is located on the southern tip of the Malaysian peninsular. Until 1965 it was a British colony and briefly part of the Malaysian state until it gained independence. As Singapore lacks natural resources, including land, the People’s Action Party, which has been in power since 1959, decided that economic survival and prosperity rested on the abilities of its people. In attempting to understand Singapore’s economic development, an analysis of human resource development in relation to national strategy is pivotal.

  • The development of Singapore’s economy

Singapore’s institutional structures are heavily underpinned by government support, and the role of the state has been crucial in its development. From the 1960s to the present, economic policy and national economic strategy formulation have gone through three stages. In the first stage, in the 1960s, the government decided that economic growth rested on the development of industry, the attraction of foreign capital, and the promotion of Singapore as a centre of trade in the region. This form of alliance capitalism, while underpinned by a socialist (or social democratic) philosophy, also encouraged free enterprise.

As the Prime Minister, Lee Kuan Yew, stated concerning Singapore’s initial independent state:

In this first phase economic strategy was focused on developing low added value and labour-intensive industries – a mixture of steel mills, shipyards, oil refineries and electronics. This development coincided with a boom in the world economy and MNCs that were seeking competitive advantage through reduced labour and running costs by opening subsidiaries in developing countries such as Singapore.

By the end of the 1970s that advantage was no longer so apparent as other, less developed economies began to offer even lower labour and production costs, and so a second economic strategy was formulated in the 1980s. This concentrated on high-tech industries, and moved away from labour-intensive industries. High-tech industries focus on science, technology, skill and knowledge, and to realise this strategy the government set about attracting foreign high-technology companies through high tax breaks and other inducements, and embarked on a massive, long-term human resource development programme.

The government itself also provided a considerable amount of capital and became a major shareholder in and owner of many of the new industries, though in the 1990s many were subsequently privatised (Teen and Phan, 1999). This approach is similar to the alliance capitalism that created the zaibatsu in Japan. Ashton and Sung (1994) describe this model as one where ‘the political need to secure long-term survival of the society meant that the short-term interests of the class-based groupings such as landowners or capitalists were subordinated to the wider goal of collective economic growth’.

Ayree (1994) sees the government’s role in human resource terms as an allocator within the labour market and also as a developer of unique human resource capabilities and competences to enable Singapore to have a critical competitive edge. Considerable money was poured into high-tech research and development and the building of science parks. The success of this strategy is evidenced by Singapore’s continuing high economic growth rates in the 1980s and 1990s, by when it had become, for example, the leading world producer of hard disk drives. It had also developed a thriving Singapore: economic growth and HRM

The sole objective was survival. How this was to be achieved by socialism or free enterprise was a secondary matter. The answer turned out to be free enterprise tempered with the socialist philosophy of equal opportunities for education, jobs, health and housing. (Vickers da Costa, 1983: 14) stocks and securities market and had become a regional leader in this area. There was considerable investment in education, particularly in the tertiary sector, and human resource development became a central focus of the government manpower development programme (Low et al., 1991).

In the 1990s the Singapore government launched a third economic strategy to take the economy well into the twenty-first century. This was precipitated by a sharp downturn in growth in the mid-1990s, caused by the impact of the financial crisis and consequent recession in South East Asia and the slowdown in global electronics demand. The manufacturing sector was further weighed down by excess capacity and keen regional competition in the non-electronics industries. In the light of these developments Singapore’s Economic Development Board (SEDB) created a ‘blueprint’ for the future grounded in a knowledge-based economy.

Singapore will become ‘a vibrant and robust global hub of knowledge-driven industries. Singapore’s manufacturing and service sectors will be further developed with a strong emphasis on technology, innovation and capabilities’ (SEDB, 2000). To sustain economic growth Singaporean companies are being strongly encouraged to move out into the Asia Pacific region and form a ‘second ring’. Advantage would then be taken of the abundance of cheaper labour in these surrounding economies, and Singapore would become the hub of this ring as a powerful international economic centre (Low, 1993).

The main aim of the blueprint is for the people of Singapore to achieve the same living standard as the Swiss by the year 2020 or 2030. In human resource terms there are two main consequences of these strategic changes in the light of increased global competition: first, the continuing development of the Singaporean education and human resource development systems to high levels; and second, the restructuring of the labour markets between the declining old industries and the rising new ones. The latter development is having and will continue to have negative effects, especially on marginalised elements in the labour force, who lack the skills, knowledge and youth to adapt to these changes.

  • Human resource development in Singapore

Central to Singapore’s economic strategies has been the development of the educational and knowledge levels of the population. Ashton and Sung (1994) believe that advanced NIEs such as Singapore are significant examples of a new model of skill formation and economic development in which changes in education policy are linked directly with the current and future demands of the economy.

As late-developing countries they have had the advantage of learning from the examples and mistakes of the older, established economies. This can take the form of transferring specific skills and knowledge directly through education and training programmes, through gaining knowledge and skills from and through foreign-based companies, and through sending students to foreign countries to learn. An important factor is that the whole population is encompassed as well as groups within the economy such as unions, companies and employer groups.

This will often mean that individual and separate group interests have to be subordinated to the long-term aims of the nation, and that some elements of freedom may be sacrificed. For example, in the first economic phase, dating from the 1960s to the 1980s, the government acted to contain labour costs by repressing labour organisations, and in the recent crisis wage costs have been cut to bring them in line with 1994 levels (SEDB, 2000).

The centrality of human resource development has been emphasised at all stages: in the first phase by developing the basic education level and skills of the population, and in the second phase by raising them to the more sophisticated level required by an advanced, high-tech economy. This required the upgrading of the education system and the creation of a training infrastructure coordinated by the Vocational and Industrial Training Board.

The Ministry of Trade and Industry and the Investment Board define the vision of the national economic strategy and then set the goals. The Ministry gathers information on the future skill and knowledge needs to fulfil the strategy, and these are compared with estimates of present skills. The Economic Development Board then calculates targets to achieve the set goals, which are then given to the Council for Professional and Technical Education to implement. They in turn set targets for schools, colleges, polytechnics, universities and other educational and training establishments.

In the third phase much emphasis has been placed on work-based learning, because the new organisational forms require not only technical skills but also the ability to work flexibly and with a greater degree of group autonomy within a problem-solving context. Studies have been made of the best systems, perceived to be Japanese, German and Australian on-the-job training. The German dual system has been particularly admired, and elements of it were borrowed in developing Singaporean apprenticeship systems in the early 1990s.

The successful growth of the Singapore economy has bee ascribed to the role of the state and the institutions it has developed to enhance the knowledge and skills of its people to meet the challenges of the twenty-first century. This has taken place in the context of a mixed economy where foreign investment and subsidiaries of MNCs have been welcomed.

However, the need to achieve a balance between state and private capital interests within a unitarist HRM state means that individual and group freedoms have had to be curtailed from time to time in the long-term interests of the economy. Thus at times trade union and individual rights have been side-stepped, as have the short-term profit motives of individual companies, and while the model has been eulogized by some observers there are doubts as to its applicability to economies outside the Asia Pacific region.


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