PSP: Economic Strategy Review recommendations fall short on worker protection & business costs

The Progress Singapore Party (PSP) said the Government’s Economic Strategy Review (ESR) falls short in three critical areas, despite supporting its overall direction, according to the party’s latest newsletter released on 2 February 2026.

In its tenth issue of The Palm, PSP responded to the mid-term update of the ESR, led by Deputy Prime Minister Gan Kim Yong, which outlined seven recommendations to prepare Singapore for long-term economic challenges.

The ESR’s proposals include positioning Singapore as a leader in artificial intelligence, broadening the range of good jobs, making lifelong learning a practical reality, and supporting firms to internationalise and navigate economic transitions.

PSP said it supports the broad thrust of these recommendations but believes they fall short of ensuring economic growth benefits are shared equitably, and that every Singaporean who works hard can live with dignity.

Three areas where the ESR falls short

The party highlighted three main shortcomings: insufficient safety nets for workers facing disruption, inadequate measures to preserve entry-level roles, and a lack of action to reduce high business costs, particularly commercial rents.

The ESR issued its mid-term update on 30 January 2026, acknowledging challenges such as slower growth and technological disruption from artificial intelligence.

PSP said these challenges are not new and that the focus should now be on the Government’s policy response.

Worker protection and lifelong learning

On worker protection, PSP referred to Recommendation #6, which aims to make lifelong learning a practical reality and empower workers to take charge of their careers.

The party said it supports efforts to broaden the range of good jobs and encourage skills upgrading, including strengthening roles less susceptible to automation such as nursing, plumbing, electrical work and phlebotomy.

PSP argued these essential trades should offer better pay, clearer career progression, and stronger professional accreditation to attract more Singaporeans.

However, the party questioned whether these measures would be sufficient given the scale of displacement and job churn expected from AI-driven change.

While the ESR acknowledged that disruption would be less destabilising with stronger transition support, PSP said it was disappointed that mandatory employer-paid retrenchment benefits were not included.

PSP had proposed such benefits during the 2025 General Election, saying they would help workers manage career transitions and pursue retraining with greater confidence.

The party also suggested increasing retraining allowances and expanding the SkillsFuture Jobseeker Support Scheme to include more displaced higher-income workers.

Concerns over entry-level job erosion

Beyond retraining, PSP said the ESR did not adequately address whether enough jobs would exist in the future, especially as productivity gains may reduce labour demand.

The party cited remarks by DPM Gan Kim Yong that gross domestic product growth may no longer guarantee job creation.

PSP said AI adoption has already reduced entry-level roles in sectors such as finance, law and consulting, weakening traditional entry points into new careers.

It argued that lifelong learning alone cannot solve the problem if junior roles disappear, as workers cannot reskill into jobs that do not exist.

The party called on the Government to preserve and redesign entry-level roles through wage support, incentives for firms to retain junior staff, stronger funding for on-the-job training, and job redesign that ensures AI complements human learning.

High business costs and small enterprises

On entrepreneurship and business conditions, PSP referred to Recommendation #2, which focuses on increasing access to capital, talent and markets to support a vibrant startup ecosystem.

The party criticised the ESR for failing to address high operating costs in Singapore, particularly commercial rents.

PSP reiterated its call for the Fair Tenancy Industry Committee to issue guidelines on commercial rent increases, a proposal it has raised since 2023.

It said excessive rent hikes have particularly affected food and beverage businesses, contributing to rising costs and recent closures.

The party warned against focusing support only on technology startups, stressing that small businesses in the service and F&B sectors create local jobs that cannot be offshored.

Consumer confidence and population concerns

PSP also said the ESR did not sufficiently address consumer confidence, which it described as essential to a resilient domestic economy.

Persistent anxiety over jobs, incomes and living costs weakens household spending and long-term planning, the party said.

It argued that lowering living costs and strengthening social safety nets would empower households to better cope with economic uncertainty.

Beyond economic issues, PSP criticised the ESR for not addressing how population policy should adapt in an era where growth may not generate more jobs.

The party noted that Singapore’s fertility rate declined from 1.2 in 2013 to 0.97 in 2024, raising concerns about social cohesion, integration and national identity.

It said rising living costs, burnout and inadequate social support continue to discourage families from having more children.

Call for stronger measures in Budget 2026

PSP said it hopes Budget 2026, which is expected to operationalise the ESR’s recommendations, will include more substantive measures.

These include stronger safety nets for workers, lower costs for businesses, and clearer protection of career pathways, enabling Singaporeans to navigate economic transition with greater confidence.