Gan Kim Yong: Singapore must adapt as economic growth no longer guarantees jobs

Economic growth will be more difficult to attain and can no longer be assumed to generate good jobs automatically, Deputy Prime Minister Gan Kim Yong said, as he set out the midterm update of Singapore’s Economic Strategy Review on 29 January 2026.

Gan, who is also Minister for Trade and Industry, said Singapore is entering “a new phase” of its economic journey. Geopolitical tensions, great power competition, and growing protectionism and nationalism are reshaping supply chains, markets and business models.

He highlighted the twin challenges of a mature economy facing slower growth and rapid technological change that raises productivity but may require fewer workers. Higher value-added activities may not need as many people, weakening the traditional link between gross domestic product (GDP) growth and job creation.

Advances in artificial intelligence (AI), the physical effects of climate change and an ageing population will further constrain growth. Achieving 2 to 3 per cent annual expansion over the medium to long term will be “very challenging”, he cautioned.

Against this backdrop, the ESR was convened in August 2025 through five committees, co-chaired by political office-holders and representatives from business, academia and unions.

The midterm report sets out seven recommendations: four focused on growth, and three on jobs and transitions. Selected measures will feature in Budget 2026 and the Committee of Supply debates, with a full government response when the final ESR report is released in mid-2026.

From landing pad to launch pad: four growth moves

Acting Minister for Transport and Senior Minister of State for Finance Jeffrey Siow outlined four “key moves” on the growth front, stressing that growth and jobs remain closely linked and must be pursued together.

First, Singapore will “extend our lead and establish global leadership in growth sectors”, especially advanced manufacturing and modern services.

These include semiconductors, specialty chemicals, biotech and finance, which already provide many good jobs and continue to expand.

Many multinational corporations (MNCs) in these sectors are already based here. The Government aims to deepen their investments and encourage them to undertake more complex, higher-risk projects in Singapore.

Siow cited Micron’s US$30 billion facility as an example of how such investments help maintain Singapore’s position as one of the world’s largest semiconductor producers.

Second, Singapore will “push up our growth frontiers” by investing in emerging technologies, such as quantum computing, decarbonisation and space.

The nascent space sector already comprises around 70 companies employing some 2,000 professionals. These are areas where Singapore “may not have the right to win yet, but we want to win the right to play”, Siow said, signalling a greater appetite for calculated risk.

Within this second move, the ESR calls for nurturing the next generation of global leading businesses. These are fast-growing, innovation-driven firms that are not yet MNCs but are disrupting existing sectors and looking for stable, well-governed locations with deep talent and capital. Singapore intends to “actively work with them, persuade them to come to Singapore, land here and then continue to grow”, positioning itself as a base for future global champions.

A related priority is strengthening the start-up ecosystem.

While Singapore already offers a strong environment for start-ups, Siow said more can be done to help them scale regionally and globally, and to support founders in achieving better exits so that capital can be recycled into new ventures.

If Singapore can both double down on existing strengths and expand into new frontiers, the aim is to transform “from a landing pad for foreign investment to a launch pad for global companies”.

The third growth move is to build AI capability as a core national advantage. AI is described as a “fundamental transformational force” for the economy and society, and the ambition is that when people think of AI leadership, Singapore comes to mind.

The country already has a refreshed National AI Strategy and several corporate AI centres of excellence.

The ESR recommends further end-to-end investment in research, industry applications, talent pipelines and adoption by small and medium-sized enterprises (SMEs).

The fourth move is to “deepen connectivity with the world” by helping firms internationalise more aggressively.

Siow acknowledged that overseas markets are becoming more difficult, with more industrial policies and protectionist measures. Even so, there is scope to support firms to “take more risk, invest in bigger projects” abroad.

The objective is for profits from overseas operations, good jobs at home and abroad, and strategic influence in key industries to flow back to Singapore, creating “a win for Singaporeans as well as for Singapore” when local firms succeed globally.

Human capital, good jobs and lifelong learning

Gan emphasised that Singapore’s status as a trusted global hub and its investment in human capital will remain central pillars of the strategy. Clear, consistent and principled policies, combined with strong connectivity, are seen as core competitive strengths.

Enterprise development will span large MNCs, promising global firms and local enterprises, including SMEs. The Government aims to grow “Singapore Global Enterprises” that can anchor headquarters functions locally while building operations worldwide, for instance in new energy, logistics and shipping.

On the jobs front, Acting Minister for Culture, Community and Youth and Senior Minister of State for Education David Neo framed the ESR’s people agenda as three moves: broadening the range of good jobs, helping Singaporeans gain new skills, and supporting businesses to reinvent themselves.

Neo stressed that good jobs are “central to Singapore’s growth agenda”. Economic transformation will reshape roles across sectors, with AI expected to permeate both technical roles and non-technical functions such as trust and safety or project management.

Crucially, job creation must not be confined to high-technology sectors alone. The ESR highlights essential services that households and businesses rely on, including skilled trades and care services, where there is scope to uplift status, professionalise roles and build clearer career paths.

In response to media questions on the definition of “good jobs”, Neo pointed to opportunities in electrification and electric vehicle infrastructure, which will create more sophisticated versions of traditional trades such as electricians.

He also noted that care services will expand as the population ages, and that technology and AI can augment care workers, making them more effective while improving outcomes.

He stressed the importance of structured pathways, with clear skills frameworks, certification and upgrading routes that allow workers to “gradually uplift themselves” and change how such occupations are perceived. Partnerships with unions and trade associations will be key in professionalising these roles and enhancing recognition.

Beyond job creation, the second jobs-focused move is to strengthen upskilling and lifelong learning. After a decade of SkillsFuture, Neo argued that Singapore must “double down” by developing a national AI workforce strategy so that every Singaporean is comfortable and confident using AI.

For students, this means refreshing core curricula so they can “learn about AI, learn with AI, learn to use AI, and more importantly, learn beyond AI”. For workers, it means meaningful opportunities to experiment with AI at the workplace and raise productivity.

The ESR also proposes weaving “work” and “learn” more tightly together. Students should gain work experience while studying, and fresh graduates and mid-career workers should be able to continue academic upgrading while working, with strong employer involvement to ensure skills translate into better business outcomes.

On the institutional side, initiatives such as SkillsFuture and Workforce Singapore already play important roles.

The committee recommends making the training and careers ecosystem more integrated and easier to navigate, so support feels like a coherent, end-to-end journey rather than a patchwork of schemes.

AI readiness, SME transformation and worker anxieties

Media questions also focused on how SMEs can become “AI-ready” and what AI means for blue-collar and skills-based jobs.

Siow said SMEs have diverse needs, but “all of them will recognise by now” that AI will fundamentally transform the economy. For some, basic adoption will involve using readily available AI tools and software packages, curated at sector level so that smaller firms can implement them quickly.

For others, meaningful AI adoption will require deeper process redesign. In such cases, agencies will work with firms individually and by sector to develop pathfinder solutions that, once proven, can be rolled out more widely. Workforce transformation is the third piece, supported by company-level retraining and nationwide AI literacy efforts via platforms such as SkillsFuture.

Neo noted that many jobs that Singaporean households and businesses depend on “will not be replaced by AI”. The key question is how AI and data analytics can augment these workers, making them “a lot more productive” and effective.

He highlighted engineering examples where workers receive data on past projects and critical components, and healthcare examples where nurses use monitoring systems and AI-enabled alerts to manage more patients safely.

On whether recommendation seven implies that some firms will be deemed unsustainable or unviable, Gan rejected the idea of “sunset industries”.

Drawing on his private sector experience, he said he has “learnt that there are no sunset industries, because there are no sunset businesses” if firms can keep up with changing conditions.

He cited the timber industry’s move to cluster operations and shift into higher value-added products such as furniture and specialised timber as an example of how firms can gain scale, share services and move up the value chain.

The key, he said, is whether businesses can refresh, reorganise and remodel themselves. Those that continue doing exactly what they did decades ago are vulnerable; those that adapt can survive even in challenging sectors.

Questions were also raised about worker frustration in a context of low fertility, immigration and an AI-driven decoupling of growth and job numbers.

Neo acknowledged that initial reactions to technological disruption are often pessimistic or defensive, including within the ESR committees. Over time, members concluded that for a small country with limited manpower, technologies that can multiply each person’s productivity should be seen as an opportunity.

Gan drew a parallel with earlier concerns about automation and productivity drives, which have since become widely accepted as essential for competitiveness. Anxiety “will always be there”, he said, but the response must be a whole-of-society effort, with the Government “there with you every step of the way” as firms and workers transform.

On short-term issues such as cost pressures and foreign tariffs, Gan noted that the ESR is focused on the medium to long term. Existing schemes and active engagement by agencies such as Enterprise Singapore will continue to address immediate challenges, while discussions with key international partners, including on sector-specific tariffs, are ongoing and often commercially sensitive.