Raising productivity is very important, and I think people agree on that.
For about 3 years, the government has been calling on firms to raise productivity. To facilitate that, the government actually decide to tune up the “pain level”, by increasing the foreign workers levies coupled with a tightening (not complete cease) of the foreign workers inflow. The government hopes that these will nudge companies into restructuring.
I’ve heard the analogy to describe this issue – that of tuning up the “pain level” of a obese man by charging him higher food prices, and at the same reduce the supply of food to him. On top of these, we hope the obese man can move towards a slimming-down exercise regime, and lead a healthy lifestyle.
At the end of the day, the obese man may end up continuing his current diet as long as he can afford it, and therefore forsaking the slimming-down regime. Alternatively, the obese man may end up toning down his food intake (if he feels the pressure of higher food prices, and lower supply of food), and actively seek ways to slim down. Lastly, I have the least desirable scenario, where the obese man tone down his food intake, but do not know how to embark on the slimming-down regime – so he will end up hungry.
No doubt that the current increase in levies and tightening of the inflows of foreign workers are making companies having a hard time. But like slimming-down for the obese man, restructuring and raising productivity is very necessary. But the point is, are there enough industry specific guidance for companies to work towards restructuring and raising productivity?
I believe having funds for companies to tap on to raise productivity or to subsidise their productivity drive is a good way to start. But some have questioned if companies really know what to do in order to restructure, and raise productivity.
I believe people do not wish to see the case where the obese man is left hungry, and yet do not really know how to proceed to slimming-down. He will be a helpless man.