The challenges of state intervention in Singapore’s youth labour market

• Published in: Equality, Diversity and Inclusion: An International Journal Vol. 37; no. 2; pp. 138 - 150
• Main Authors: Waring, Peter, Vas, Christopher, Bali, Azad Singh
• Format: Journal Article
• Language: English
• Published: Birmingham Emerald Publishing Limited 14.03.2018; Emerald Group Publishing Limited
• Subjects: Automation; Children & youth; Costs; Dependency; Efficacy; Employment; Foreign labor; Foreign workers; Human capital; Labor market; Manufacturing; Manufacturing industry; Productivity; Rhetoric; Skill development; Small business; Staffing; State intervention; Transaction costs; Youth; Singapore; Graduates; Employment; Labour market
• ISSN: 2040-7149; 2040-7157
• DOI: 10.1108/EDI-10-2017-0211

Purpose The purpose of this paper is to assess the efficacy of the policy measures to encourage young Singaporeans to pursue employment in the manufacturing sector while at the same time discouraging the sector’s traditional dependence on low-cost foreign labour. In doing so, the paper sheds light on the challenges faced by small and medium enterprises (SME) as well as the less than optimum impact the policy rhetoric has had on redirecting the aspirations of young people away from tertiary qualifications attainment and towards vocational skills development. Design/methodology/approach The paper draws on primary survey data of 222 manufacturing firms and in-depth interviews with 20 SME leaders in Singapore. Findings The paper argues that despite the government’s policy efforts to encourage the employment of young Singaporeans in the manufacturing sector, the impact has been negligible. Even with moves to increase the transaction costs of employing foreign workers, the findings indicate that SMEs have not changed their staffing policies. Indeed, the results lay bare the low cost-low skill/low productivity trap that most SMEs now find themselves in. The government’s efforts to discourage the pursuit of tertiary qualifications in favour of vocational qualifications are unlikely to succeed. Originality/value The value of this research is fourfold. First, it exposes the difficulty of policy overcoming path dependency. Second, it sheds light on the need for government to rethink its policy approach in how best to re-tool human capital for traditional industry sectors like manufacturing. Third, the results show that there is limited efficacy in simply increasing transaction costs and altering rhetoric to discourage attainment of tertiary qualifications unless vocational employment is adequately remunerated. And finally, the results indicate that firms in the manufacturing sector need to embrace new business models, practices and technologies that are reflective of the digital era to be able to attract youth.