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Human Capital Development in Singapore: An Analysis of National Policy

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DOI: 10.1177/1523422304266074

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䉱 Articles
Human Capital Development
Advances in Developing
10.1177/1523422304266074
Osman-Gani / HRD IN SINGAPORE
Human Resources August 2004

in Singapore: An Analysis of
National Policy Perspectives
AAhad M. Osman-Gani
Nanyang Technological University, Singapore

The problem and the solution. Singapore provides an inter-

esting case study of human capital development (HCD) as
national strategy. Its human resource strategies have been con-
tinuously revised and adjusted in conjunction with other
national strategic economic policies. Although some studies
have been done on microlevel human resource development
(HRD) practices, very little research has been done on the stra-
tegic and macrolevel policy perspectives. This article presents
an analysis of macrolevel HCD strategies in Singapore from a
national policy perspective and describes the elements of the
HRD infrastructure.

Keywords: Singapore; national policy; human capital development

Human resources have been identified as the single most important strategic
capital for Singapore. A small country with virtually no natural resources,
Singapore has become one of the most developed countries in Asia primar-
ily due to its strong emphasis on developing human resources and for con-
tinuously making significant investments in its human capital. Human
resource development (HRD) has always been a core element in its strategic
economic plans, as reflected in the eight strategic thrusts of its Strategic
Economic Plan (Ministry of Trade and Industry, 1993; C. Tan, 1996; Wong
& Ng, 1993). The outcome of these initiatives could be found in the reports
of the U.S.-based organization Business Environment Risk Intelligence
(BERI), which has ranked Singapore’s workers as the best in the world for
relative productivity (Standards, Productivity and Innovation Board, 2003).
Also, the World Competitiveness Yearbook of the International Institute for
Management Development (IMD) placed Singapore’s workforce competi-

Note: This article was subject to a 2-tier review that did not involve authors who are members of
the ADHR Editorial Board.
Advances in Developing Human Resources Vol. 6, No. 3 August 2004 276-287
DOI: 10.1177/1523422304266074
Copyright 2004 Sage Publications
 Osman-Gani / HRD IN SINGAPORE 277

tiveness at par with that of the United States and other developed countries
(Ministry of Manpower, 2003a). In the early days of its economic develop-
ment, the efforts at HRD came under the rubric of manpower development,
general education, technical education, and training. As it moved from
investment-driven economic growth to that which is driven by innovation,
together with its emphasis on the regionalization and globalization of busi-
ness, the government has embarked on more sophisticated HRD strategies.
The HRD strategies have been continuously revised and adjusted in con-
junction with other national strategic economic policies. Singapore is thus a
unique case that exemplifies the benefits of national HRD policies and strat-
egies. Although there have been some studies done on microlevel HRD
practices, very little research has been done in this respect on the strategic
and macrolevel policy perspectives (Osman-Gani, 1996; Osman-Gani &
Tan, 1998, 2000; Osman-Gani & Toh, 1997). This article presents an analy-
sis of the macrolevel human capital development (HCD) strategies in Singa-
pore from a national policy perspective and describes the elements of the
HRD infrastructure. The objective is to present a descriptive account of
various aspects of the human resource strategies adopted in Singapore in the
course of its economic development.
Several terminologies have been used in the past that emphasized the
importance of HRD based on the changing perspectives of national policy
dimensions of Singapore: human resource development, manpower devel-
opment, people development, training and skills development, workforce
development, and human capital development. Increasingly, emphasis has
been on HCD, which considers people the significant strategic capital
on whom investments should be made to derive the desired returns in terms
of improved performance. In this article, HCD and HRD are used
interchangeably.

National Policy and HCD Infrastructure

In Singapore, the policy infrastructure for HCD is characterized by two
distinct features: a tripartite approach, based on cooperation among
employers, unions, and government; and a multidepartmental approach
involving all relevant government agencies. The following sections provide
more details in this regard.

The Tripartite System

The tripartite relationship ensures that there is agreement over strategies
and necessary steps required for national HRD strategies. The policy of
worker training and retraining to upgrade them with skills for the economic
restructuring in the early 1980s was possible only with the acceptance and
cooperation of the unions. An example is the Manpower 21 Report,
278 Advances in Developing Human Resources August 2004

launched on June 4, 1998, which was produced by a partnership among the

government ministry, unions, and more than 100 participants from the pri-
vate sector (Ministry of Manpower, 2003a).
Another important tripartite institution is the Skills Development Fund
(SDF), founded by the government and guided by a tripartite council. The
fund is both a mechanism for financing the employee training and a motiva-
tion to employers to upgrade their employees. The SDF was created because
employers in Singapore are not normally inclined to spend money on train-
ing unless there is a scheme to entice them to do so. All employers contribute
1% of the total wages of employees who earn S$1,500 or less (revised from
S$1,000) a month or $2 per employee (whichever is greater) a month to the
SDF. Employers can use this fund by claiming about 90% of the training
subsidy for their employees’ skills development through the SDF. Thus,
employers are motivated to send their employees for these training pro-
grams, because that is the only avenue through which they can derive benefit
from their contributions (Ministry of Manpower, 2003a; Skills Develop-
ment Fund, 2003).
In 2000, the Skills Development Levy was revised to provide more funds
for skills upgrading. The Skills Re-development Programme (SRP), which
started with the manufacturing sector, was extended to support worker train-
ing in service sectors. Also, an S$5 billion Lifelong Learning Fund was
established, and a School of Lifelong Learning will be set up to provide con-
tinuous skills development. In addition, the government helped raise funds
and gave a matching grant to the NTUC’s (National Trade Union Congress)
Education and Training Fund (N-ETF). A DomestiCaRE program was also
launched, aimed at helping retrenched and unemployed Singaporeans
reskill to fill job vacancies in the domestic housekeeping industry over the
next year (Ministry of Manpower, 2003a).
The National Wages Council (NWC) plays an important role in HCD
because it is responsible for motivational aspects of performance in terms of
compensation and other elements of the wage package. As a tripartite body,
it conducts an annual audit of changes in the Singapore economy, particu-
larly in the wages sector in relation to the level of employment and unem-
ployment, international competitiveness, equity to workers and employers,
inflation rate, and productivity enhancement (Lim, 1994). The audit pro-
vides the council with information to set out wage guidelines that form the
basis of reference should employers and unions fail to agree on wage issues
(Tan, 1998). The recommendations for wage adjustments made by the NWC
have highlighted the significance of training and retraining for improving
productivity, increasing economic development, and meeting the chal-
lenges of global competition (Ministry of Manpower, 2003b; Osman-Gani
& Tan, 2000).
 Osman-Gani / HRD IN SINGAPORE 279

The Multidepartmental Approach

As for the second factor, Singapore uses a multidepartmental
approach to its national policies for HCD. Prior to 1998, the Ministry of
Trade and Industry and its various agencies, such as the Investment Board,
ascertained information about future human resource needs (Ministry of
Trade and Industry, 1998). The information is collated by the Ministry and
translated by the Economic Development Board (EDB) into targets for the
specific skills required by the nation, then forwarded to the Council for Pro-
fessional and Technical Education (CPTE) for its deliberation. The relevant
agencies then provided feedback on the timeframes within which they
would be able to attain those targets. The council, formed in 1979, deter-
mined the specific numbers of different skills to be developed by the univer-
sities, polytechnics, schools, and Institutes of Technical Education (ITE).
This council was superseded by the National Manpower Council (NMC), a
ministerial council headed by the minister for manpower to lead in human
capital planning. It identifies the nation’s human capital needs in the
medium (3-5 years) to long (5-10 years) term and maps out the strategies to
meet these needs.
The NMC is supported by the Employment Review Committee (ERC) as
the executive arm, chaired by the permanent secretary (Manpower). The
members include the permanent secretaries or deputy secretaries from rele-
vant ministries, CEOs/directors from economic agencies and selected
boards, principals or presidents from institutes of higher learning, and
selected public and private training providers. This is further supported by a
Manpower Planning Club (MPC) at the working level.
The national policy on HCD in Singapore is contained in the Manpower
21 Report (Ministry of Manpower, 2003a). The report outlines the human
capital agenda for Singapore—to enable its people to be competent for the
21st century and the new knowledge-based economy. The report recom-
mended the establishment of the School of Lifelong Learning to establish
new infrastructures to enable workers to work within their own communi-
ties and homes (Ministry of Manpower, 2003a). It envisaged the retraining
of the workforce and programs to attract intellectual capital (Ministry of
Manpower, 2003a). The six key strategies with recommended actions are
depicted in Figure 1.
The key government institution responsible for national human capital
policy is the Ministry of Manpower (MOM). The Manpower 21 blueprint,
the current strategic plan for HCD, was designed by the MOM with the
vision of allowing Singapore to become a talent capital with constant
upgrading of employee skills and knowledge.
280 Advances in Developing Human Resources August 2004

Strategy 1: Integrated Manpower Planning

Recommendations: 1. Enhanced Manpower Information System
2. National Manpower Council
Strategy 2: Lifelong Learning for Lifelong Employability
Recommendations: 1. School of Lifelong Learning
2. National Skills Recognition System
3. Incentives
4. One-Stop Career Centers
Strategy 3: Augmenting Singapore’s Talent Pool
Recommendations: 1. Singapore Outreach
2. Review Foreign Worker Policy Guidelines
Strategy 4: Transforming the Work Environment
Recommendations: 1. Professionalizing Domestic-based Industries
2. World-class HR practices
Strategy 5: Developing a Vibrant Manpower Industry
Recommendations: 1. World-class R&D Institutions to Set Up in Singapore
Strategy 6: Redefining Partnerships
Recommendations: 1. Harnessing Collective Energies

FIGURE 1: Key Strategies and Recommendations in M21 Report

Source: From Manpower 21 Report by Ministry of Manpower, 2003. Retrieved October 23, 2003,
from http://www.mom.gov.sg.

Workforce Development Agency

A more significant step was the setting up the Workforce Development
Agency (WDA) as a statutory board under the Ministry of Manpower. The
WDA was effective beginning September 1, 2003. Its mission is to enhance
the employability and competitiveness of employees and jobseekers,
thereby building a workforce that meets the changing needs of the Singa-
pore economy. The WDA is chaired by the permanent secretary of the
MOM, and a CEO oversees two networks: industry (with industry and HCD
clusters) and learning (Ministry of Manpower, 2003a).
The short-term vision of the WDA is to make employees resilient,
multiskilled, and agile. Resilient refers to the ability to remain positive and
strong in difficult times; the individual can then go on to different training
opportunities to upgrade his or her personal skills. The job seeker will then
have a higher level of agility to adapt to the needs of different industries and
thus be able to take on different jobs, increasing his or her chances of
employability. These three characteristics are important factors to enhance
lifetime employability.
The long-term objective of the WDA is to assist employed workers to stay
employed by maintaining up-to-date skills and cooperating with industries
and employers to strengthen HR practices so that training integrates with
performance management and career paths within organizations (Ministry
of Manpower, 2003a; Workforce Development Agency, 2003).
 Osman-Gani / HRD IN SINGAPORE 281

The WDA works closely with other ministries, statutory boards, and
agencies to provide appropriate training and funding to Singaporeans.
Training-related programs include on-the-job training guided by the OJT 21
Plan, National Skills Recognition System (NSRS), and Critical Enabling
Skills Training (CREST).
Currently, the WDA is working hand in hand with the Manpower 21 plan,
although it is not restricted by it. It is a new attempt by the government to
start an independent board to act as the central body for coordinating all
human capital issues. As such, some changes to the original infrastructure
were made. The former HCD Division, comprising the SDF Secretariat, the
Labor Market Development Division under the MOM, and the CREST Sec-
retariat and the NSRS Centre under Standards, Productivity and Innovation
Board (SPRING), Singapore, will come under WDA (Ministry of Man-
power, 2003a).

Workforce Education and HCD

The delivery system for HCD in Singapore involves elements of the
national education system and organizations in the private sector, such as
professional organizations and commercial schools. In the public sector,
universities and polytechnics provide postsecondary education. Vocational
training is provided by the ITE. All institutions provide continuing educa-
tion to their respective target segments of the adult population.

Singapore’s Education System

Singapore’s education system is integrally linked to its HRD strategies.
The education system is structured on meritocracy and a series of filters that
stream each cohort of students into the relevant vocations and institutions. A
schematic diagram of the education system is shown in Figure 2. Formal pri-
mary education begins at 7 after 2 years of preschooling. The first hurdle
takes place after 4 years of education at the age of 10. There is another selec-
tion exercise at 9 to select gifted students for an enrichment program.
There are limited places in universities because there are currently two
comprehensive universities offering full-time degree courses with an addi-
tional university focusing on business and management education. The
types of programs offered at the postsecondary and university levels are
determined by the human resource needs of the country. The needs are
determined through a coordinated process by the government and key
public sector agencies (such as EDB) that are involved in the planning and
policy-making process.
Prior to joining the workforce, school leavers requiring technical/
industrial skills may apply for apprenticeship training provided by the ITE:
282 Advances in Developing Human Resources August 2004

Employment

Universities
University
Education
Post Institutes of GCE “A” Level
Polytechnics/EDB
Secondary Technical Education Institutes of Technology
Education Junior Colleges

GCE “O” Level

Sec. 5 Normal Examination

GCE “N” Level

Examination

Secondary Normal (Academic) Special/Express

Education Normal (Technical)
4 years
Primary School Leaving Examination
Streaming

Orientation Stage Primary 5-6

with 3 language streams
Primary Legend
Education Language Streaming Level of Education
6 years
Foundation Stage Primary 1-4 Streaming/Examination

FIGURE 2: Singapore’s Education System

Source: Osman-Gani and Tan (1998).

on-the-job with the employer and off-the-job at the ITE. The apprenticeship
system is modeled after Germany’s dual training system. The ITE currently
offers about 70 such apprenticeship programs.
The Basic Education for Skills Training (BEST) program enables work-
ing adults to acquire basic proficiency in English so that they can further
their education and training. The Worker Improvement Through Secondary
Education (WISE) program enables working adults who have completed
their primary education or the BEST program to take the General Certificate
of Education (GCE) N-level examination in English. Modular Skills Train-
ing Initiative (MOST) is a national program for those who wish to acquire
new skills or upgrade skills through a part-time program offered during the
day, on evenings, and on weekends. The Adult Cooperative Training
Scheme (ACTS) is aimed at young working adults between the ages of 20
and 40 with little or no skills. The Training Initiative for Mature Employees
(TIME) program enables workers who are 40 years and older to take the
National ITE Certification (NITEC). The course is conducted in six
monthly modules in English, Mandarin, Malay, or Tamil depending on
demand.
A new initiative known as the Reskilling for New Economy Workforce
(ReNEW) was launched recently. Like all other training programs, it is an
 Osman-Gani / HRD IN SINGAPORE 283

initiative aimed at promoting lifelong employability through continuing

education and training. Currently it comprises three features: (a) Fast Track
Programme, (b) Post-Nitec Programme, and (c) Top-Up Certification
Scheme. The Fast Track Programme allows working adults to be certified in
a shorter time through an intensive course, the Post-Nitec Programme tar-
gets ITE graduates or others with equivalent certification to update or
acquire new skills through short courses in a specialized or new technologi-
cal area, and the Top-Up Certification Scheme enables ITE graduates to
obtain additional certification (Institute of Technical Education, 2003).
The employee unions also provide education and training to their mem-
bers to upgrade their skills. The federation of employee organizations, the
National Trade Union Congress (NTUC), has 72 trade unions and 5 associa-
tions affiliated, with a membership of about 265,000 workers. Among
action programs identified in its NTUC21 initiative, the enhancement of
employability of workers through skills certification was placed at the top.
In 1996, NTUC launched the skills redevelopment program (SRP) aiming to
achieve the “new skills today, better employability tomorrow” (National
Trade Union Congress, 2003). It launched the NTUC education and training
fund (N-ETF) in 1998 to support 42 different IT-related and office-skills
courses, and more than S$48 million has been raised for the training fund.
In the private sector, there are more than 50 organizations offering educa-
tion and training programs through distance learning leading to degrees
conferred by overseas universities (Department of Statistics, 2000). The
prominent organizations offering such development opportunities are the
Singapore Institute of Management (SIM), Management Development
Institute of Singapore, and Informatics (focusing on information technol-
ogy). The SIM has a range of degree courses that range from bachelor to
doctoral programs (distance learning), and it provides certificate and
diploma programs as well. Two other professional organizations dealing
with training and human resources are the Singapore Training and Develop-
ment Association (STADA) and the Singapore Human Resource Institute
(SHRI). These organizations provide important avenues for the career
development of HR professionals, and for others who are unable to obtain
university education through the formal system.
Besides the SDF, another incentive that motivates corporate training on
the part of employers is the People Developer Standard managed by
SPRING (Standards, Productivity and Innovation Board). The standard
gives recognition to companies that invest in their people and who have
established effective means for continued development. It was launched in
1997 after 2 years of field-testing with 55 organizations known for their
enlightened human resource practices. Organizations that are certified to
have attained the standard have part of their training cost supported by the
SDF. To qualify, companies must be committed to the development of all
284 Advances in Developing Human Resources August 2004

staff, implement training and career plans, and follow up on activities. In

addition, the board has its OJT 21 plan, which has the objective to skill
500,000 workers (one third of the indigenous workforce) by 2005 through
structured on-the-job training (OJT), to develop 500 industry-wide OJT
blueprints to help companies deliver quality training, and to work with
1,000 companies to offer certified OJT courses to the workforce.

Conclusions
Singapore provides an interesting case study of HCD as a national strat-
egy. The human resource strategy is integrated with the economic and
national strategies for the nation, contributing to Singapore’s economic
development. Although it may not be possible to show a cause-and-effect
relationship between the HRD strategies adopted in Singapore and their
contribution to Singapore’s economic growth, HRD strategies have played a
critical role. Apart from its location as a port, Singapore lacked two key
attributes for international business success—capital and land. When it
became independent in 1965, it was considered by many experts to be an
economy that was doomed to failure. It had 225 square miles on the main
island and some 53 smaller islands around it. This area has increased over
the years through land reclamation but is still minuscule when compared to
that of its neighbors. In 1965, it had a tiny population, most of whom were
not highly skilled or highly educated. Yet, Singapore has overcome its defi-
ciencies in a short time (Kao, 1995). One of the unique features of Singa-
pore’s national HRD strategies is its investment in human capital. Singapore
had the highest per capita national expenditure on education in Asia for
1991-1995 (World Development Report, 1997), which continues through
today. Its well- trained human resources is a major contributor to Singa-
pore’s success, because Singapore is presently not a haven for low-technol-
ogy investments requiring cheap labor. The top three industrial sectors in
terms of GDP contribution are financial and business services, manufactur-
ing, and commerce and external trade (including tourism). The first two
industrial sectors barely existed at the time of Singapore’s independence,
because the British colonial rulers developed an infrastructure only to meet
their needs in using Singapore as a port to the hinterland in the Malay Penin-
sula. British direct commitment to Singapore ended with the withdrawal of
British forces based in Singapore in 1971. Singapore is now an important
financial center in Asia. A number of multinational corporations have also
established their manufacturing operations in Singapore. Some have estab-
lished operational, administrative, and research and development
headquarters in Singapore. These activities are predicated on Singapore
possessing the required human resources.
 Osman-Gani / HRD IN SINGAPORE 285

This article has provided a brief account of Singapore’s HCD. There are
lessons that other economies can emulate. An important caveat must be
noted, however. There is a unique combination of factors leading to Singa-
pore’s success—a committed government, a network of agencies, and a
commitment to tripartitism. These factors may have arisen by design or may
have evolved through the human actors; one can only make ex post facto
observations. There are a number of other factors that work in Singapore’s
favor. First, it has had the same party in government for 30 years, with the
possibility of continuously developing a human resource strategy. Second,
Singapore is small geographically, making it easier to establish institutions
and to reach various levels of the population with the measures introduced
under its HRD strategy. Third, Singapore has been led by farsighted individ-
uals who realized early that HRD is critical to its economic development.
The Singapore case does, however, indicate that governments seeking to
pursue national HRD/HCD strategies need to have these strategies inte-
grated with other national objectives. Furthermore, the planning, imple-
mentation, and evaluation of the strategies need to be multidepartmental in
approach. The tendency to leave the area to a specific government agency
while placing it in the hands of specialists leaves out the possibility of
implementation throughout the various levels in the economy. The single-
agency approach also often leads to the omission of other considerations
that other departments may be able to provide. The uniqueness of Singapore
in terms of its location, size, and resource availability makes it different
from other countries of the region. In other areas, however, there may be
some similarities (e.g., sociocultural, tradition, and Asian work ethic).
Although it may be difficult for other countries to emulate Singapore’s suc-
cess, there might be some objective elements of national HCD strategies that
could be adapted to their conditions. I hope that this study provides some
useful insights to this end.

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 Osman-Gani / HRD IN SINGAPORE 287

AAhad Osman-Gani, professor of HRD and international management, Nanyang

Business School, NTU, Singapore, has more than 25 years of teaching, research, and
consulting experience in several countries. Published extensively in reputed inter-
national journals, he is an associate editor of HRDI, IJTD, and SMR. He is also a
member of the editorial boards of five other international journals published from
the United States and United Kingdom. He is chairperson of the Asia Chapter of the
Academy of HRD.

Osman-Gani, A. M. (2004). Human capital development in Singapore: An analysis of

national policy perspectives. Advances in Developing Human Resources, 6(3),
276-287.

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