A busy food court in the second terminal of Changi Airport is the playground for Singapore’s latest quest to boost productivity.
With minimal human interaction and in stark contrast with the abundant manpower commonly used in food courts elsewhere on the island, there, hungry passengers can select their chicken rice or bowl of noodles from a machine, pay with a credit card and collect their food.
As the city state grapples with a rapidly aging population, falling fertility rates and a slump in economic growth, it’s this kind of automated initiative that’s popping up more frequently across Singapore — from self driving taxis to face-reading payment systems for rail commuters. Singapore is increasingly turning to machines to replace low-end manpower with authorities restricting the inflow of foreign workers after a backlash against immigration.
“Productivity is a vital component of growth especially for when labor contribution to growth is declining, especially in advanced economies such as Singapore. Singapore has been trying to be on the cutting edge of applying more automation,” said David Mann, chief economist for Asia at Standard Chartered Plc.
Select Group, the Singapore-based operator of the Changi food court, is as it is so satisfied with the cost reductions achieved so far.
And Singapore’s government is just as satisfied. Under a new system that seeks to reward productivity gains, SPRING Singapore, a state agency responsible for promoting local enterprises and products, is currently conducting trial tenders for two food centers. Under the new system, the agency will put a 50 percent weighting on productivity considerations and the rest on price while I the older system the winning bidder was selected on price.
All future tenders for new coffee shops, a local term used to describe open-air food courts adjacent to public housing, would use the productivity-weighted system by the SPRING. Singapore plans to increase productivity in its food industry by an annual 2 percent over the next five years and the agency sees the productivity-weighted system as a key component of the plans.
“Other countries are not under the workforce pressures that Singapore is under. Other countries have population trends more in their favor, so they have less pressure to drive productivity. That’s why Singapore is doing what it’s doing,” Jonathan Galligan, an economist with CLSA Ltd., a brokerage and investment company, said by phone from Singapore.
Since it’s among the least productive in the city-state, the food industry has been targeted. According to SPRING, it employs 160,000 workers, or 4.5 percent of the local workforce while it accounts for 0.8 percent of gross domestic product. Manpower in the industry grew on average 6 percent a year, higher than in the economy as a whole from 2010 to 2014.
By providing grants for companies and employees to encourage more companies to venture into the ready meals market, SPRING is working with the Restaurant Association of Singapore. Replacing manned stalls, it’s also pushing to boost the number of food vending machines.
(Adapted from Bloomberg)