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SINGAPORE — Prime Minister Lee Hsien Loong said that Singaporeans must be prepared for more economic challenges in the year ahead, as there may be a recession coming within the next two years.
Speaking at the May Day Rally at Downtown East on Sunday (1 May), PM Lee said that the outlook for the post-COVID economic recovery has been clouded considerably by the Russia-Ukraine war.
"The government is doing all it can to cushion the impact on Singaporeans and alleviate the cost-of-living pressures," he said during his speech.
"But we must be prepared for more economic challenges in the year ahead. Inflation will remain high. Central banks in the developed countries are tightening their monetary policies, raising interest rates. Global growth will be weaker, and there may be a recession within the next two years.
"We have to face up to these realities."
Impact of war felt on cost of living
PM Lee thanked the Labour Movement for providing vital support to workers and for keeping job losses down amid the COVID-19 pandemic.
However, with no good outcome in sight in the Russia-Ukraine war, Singaporeans are already feeling the impact of the war on the cost of living, amid the worldwide energy crunch and food supplies disruption.
"Given our small size, in world markets we are always a price taker, we have very little bargaining power. If the prices go up, our prices go up; if supplies are short, we are squeezed. We cannot avoid these global headwinds," PM Lee said.
"In the short term, government support schemes will help to share the burden fairly, and ease the hardship on households. But in the long term, this does not really solve the problem. We can share the burden, but the burden is still upon us.
"The fundamental solution to this is to make ourselves more productive, to transform our businesses, to grow our economy, to uplift everyone. Then our incomes can go up, and that can more than make up for higher prices of energy and food."
Pivoting businesses to capture new opportunities
PM Lee believes that Singapore's tripartite partnership among unions, employers and the government is vital for the country to pull through during uncertain times and remain united and successful in the future.
Major policy changes have involved tripartite partnerships, such as the developments of the Progressive Wage Model and the COMPASS framework for approving employment passes.
PM Lee cited several examples of how union leaders and their partner companies are pivoting and adapting to the rapidly-changing economic environment, in order to capture new opportunities.
For example, precision engineering firm Certact Engineering saw an opportunity to pivot from producing metal parts for semiconductor manufacturers to producing plastic parts for medical equipment. It joined NTUC's Company Training Committee initiative to map out the changes necessary, and business has since doubled.
"I urge companies to nurture this strong partnership with the Labour Movement, and to encourage more workers, including PMETs and freelancers, to join the Labour Movement," PM Lee said.
"This is our best strategy to continue progressing together. In Singapore, unions are good for business. I should add, this being May Day in Singapore, that businesses are good to unions too."
Vital that NTUC remains a strong institution
As Singapore emerges from the pandemic into a world altered by COVID-19 and threatened by significant global security challenges, PM Lee said the imperative for business and workforce transformation has never been stronger.
Hence, he said that the NTUC must remain a strong institution, working shoulder-to-shoulder with the government to secure the trust of the people.
"For us, change and transformation is an unending task, as we continually reinvent ourselves to maintain our place in the world," he said.
"But having fought COVID-19 together, we can be confident of overcoming these challenges, and making the most of all the chances that will come our way."
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