SMEs in trouble (or what the PAP dare not tell you about productivity)

At the bottom of this post, I pasted an article in today’s Straits Times that talked about how SMEs are having trouble staying afloat because of tightening foreign worker quotas. The typical responses to such articles are:

  • Brushed off as propaganda by mainstream media
  • PAP/rich employers trying to get sympathy for more foreign workers/talent.
  • PAP not caring about the plight of SMEs
  • Laments that Singaporeans are too pampered for blue-collared jobs

I humbly submit another perspective:

“This development is good for Singapore. It is also what the PAP dare not tell you about higher productivity.”


You see, when the PAP wants Singapore’s productivity to improve, they aren’t just talking about sending workers for more training. It’s not just about making individual companies more productive.

It is also about culling the weak. In the cold harsh world of capitalism, adapting to change is necessary. A company that can’t cope with market changes is doomed to fail.

Singaporeans have spoken. We want to be less dependent on foreign workers. We want better jobs with higher wages. And so companies must learn to survive on less foreign workers. Those who can’t do so will die off.

Do you remember Kodak? It was synonymous to photography. It used to be that you couldn’t find a photo-developing shop that didn’t sell Kodak film. Now, the company is bankrupt, left behind by a world that has moved on to digital photography.

Should the government save companies like Kodak? Obviously not. We want jobs for Singaporeans. But not just any job. We want good, meaningful jobs that pay well. Such jobs can only come from companies that are productive in the global economy.  A dying company is no good to anyone.

The government’s task is to create good jobs for Singaporeans. It does so by fostering a stable and conducive environment for businesses to grow. But it must also allow companies to die. In the words of Ricardo Hausmann: “What distinguishes a good industrial policy is not the ability to pick winners, but the guts to let losers go.”

This is the story that the PAP government dare not say. It is politically unacceptable to tell Singaporeans and their companies that its policies will make companies die off.

After all, the government must be seen to be saving jobs. During the financial crisis, the Jobs Credit Scheme was about savings as many jobs as possible. This policy achieved its goal, but it had the terrible side-effect of saving bad jobs. Bad companies that would have normally died off  managed to live for a while longer.

If another recession happens, I hope the Jobs Credit Scheme doesn’t re-enact itself. We are already facing all-time low unemployment. Companies are screaming for more foreign workers to grow. But how many of these companies have survived too long on cheap foreign labor? It is time for weak companies to die off, so that their employees can be shifted to better performing companies. It’s the survival of the fittest, and only the strong should survive.



About sgthinker

I'm a 40-year old Singaporean male, and this blog pens down my thoughts and feelings about Singapore's political happenings, government policies and society trends. I hope this blog will provide a moderate voice in the growing online debate about the state of Singapore's society. Some of the posts here won't be solely written by me, since there will be times when other writers are more eloquent at expressing their views, in which case I'll share their insights (along with my comments). The content on this blog is owned by me.If you wish to share or reproduce the content, please attribute it to this blog.
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2 Responses to SMEs in trouble (or what the PAP dare not tell you about productivity)

  1. Pingback: Beware those who deny change to themselves |

  2. Pingback: A pink IC does not give you the right to a job |

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