After the brief recession in 1998, the Singapore economy bounced back strongly in 1999 with a growth of 5.4%. The rapid recovery was led by the upturn in the global electronics demand as well as the pick up in the regional economies. However, the $10.5 billion cost cutting package implemented last year also played a major role. In particular, the 10 %-points cut in employers� CPF contribution has helped our exports regain cost competitiveness. As a result, we were able to swing with the economic upturn.

The CPF cut was stoically accepted by the unions and workers. This convinced investors that our workers were able to look beyond their immediate self-interest. Hence, even during the financial crisis, we attracted a steady flow of high quality foreign investments. The strong tripartite understanding and trust between workers, employers and Government built over the years have withstood the severest test of the Asian economic crisis. We have gone through fire together and emerged stronger.

As a result of our cost-cutting measures and the economic upturn, workers find it easier to get jobs. Unemployment rate has fallen from a high of 4.4 % in Dec 1998 to 2.9 % in Dec 1999. Retrenchments have also declined to 14,600 from a high of 29,100 in 1998. Recruitment and resignation rates have risen, and the labour market is tightening.

As the economy continues to grow, workers can expect higher wages this year. Companies that have performed well should reward their workers accordingly. However, we should ensure that wage increases remain in line with productivity gains. Otherwise, we shall soon outprice ourselves in the competitive market.

In the past, retrenchments occurred mainly during economic recessions. This is no longer so. In the US, despite its sustained economic boom and the low unemployment level, the number of layoffs in 1999 was among the highest in the decade. It used to be that waning companies fire, while new and growing ones hire. But it is now becoming common for companies to both fire and hire workers at the same time. The reason is simple: under intense competitive pressure, companies have to constantly restructure even when times are good. They have to adopt new technology and upgrade their operations to stay afloat. They lay off outdated or redundant workers, and at the same time employ new ones with modern skills.

Workers who have skills in the new technology are in huge demand all over the world. Such skilled workers are in short supply. The bid for them has taken on a global dimension. The US is expanding its programme of offering H-1B visas to foreign skilled workers. Germany is relaxing immigration rules to allow German companies to recruit as many as 20,000 foreign high-tech workers from Asia and Central Europe. Similarly, Canada, the UK and Australia are also liberalising the entry of high-tech workers into their countries. Worse, Singapore is being specifically targetted because our skilled workers speak English and have a good reputation. For example, hospitals in the UK are actively recruiting our nurses. And we are already short of nurses!

Faced with strong competition from the dot.com companies, traditional "brick and mortar" companies are grappling with the problem of talent retention in the New Economy. Attracted by the prospects of high returns through stock options and the exciting opportunity of building a business from scratch, many talented employees are forsaking the traditional companies to join start ups. Even blue chip companies like Arthur Andersen, KPMG and Compaq are affected. Nor is this phenomenon confined to the developed economies. In Korea, the chaebols, which were once the most preferred employers, have seen staff turnover doubled as employees leave for start-up ventures. In a bid to retain talent, Arthur Andersen recently relaxed its office dress code, and set up a $500 million venture capital fund to provide its consultants the fresh challenge of working with start-ups.

While the new economy offers tremendous opportunities to workers with the requisite qualifications or skills, it poses great challenges to workers who are under-skilled, or whose skills are rendered redundant by changing technology. Such workers will find it increasingly difficult to find new jobs. It is estimated that about 3 out of 4 new jobs created in Singapore will require skilled workers. Hence, unless our workers retrain and equip themselves with the skills required in the New Economy, they may find it increasingly difficult to find employment.

The Government is going all out to help workers upgrade their skills. Under the Manpower Development Assistance Scheme, $200 million has been set aside for 5 years to co-fund programmes to train workers, develop skill standards, and set up learning infrastructure. In particular, the Skills Redevelopment Programme, aims to train some 100,000 workers by 2003. The National Skills Recognition System will certify job-based competencies and facilitate bite-size, modular training. This will make it more flexible and manageable for workers to undergo training.

However, these schemes will only work if there is commitment from both employers and workers. Our workers must be prepared to train and retrain. Employers, on their part, need to recognise that workers require their support for training, and that investment in the skills of their workers enhances the competitiveness of their businesses.

To inculcate learning as a way of life, the Government, in partnership with the private and people sectors, has launched a Singapore Learning Movement. The objective of the movement is to build greater recognition of the need for continual learning and motivate the workforce towards lifelong learning. To anchor the movement, there will be 2-week long Singapore Learning Festival between August and September this year.

The New Economy offers many exciting opportunities for our workers, if they are prepared to continually learn relevant skills. This may appear hard, especially to our older workers with less than secondary education. But I am confident that so long as they adopt a positive attitude, they can learn and benefit from retraining.

I wish all Singaporeans a Happy May Day.

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