VOLUNTARY LABOUR TURNOVER : AN EMPIRICAL EVIDENCE FROM SINGAPORE

Abstract

After two decades of strong economic growth, Singapore is now faced with a tight labour market because of the rapid expansion of economic activity. In comparison to other countries like Japan, South Korea and Taiwan, Singapore experiences the highest labour turnover rate. As Singapore's competitiveness is dependent on the efficiency of its workforce, it is thus important for the Singapore government to address this issue. This paper aims to understand the nature of labour turnover in the local context. In my analysis, I will study the pattern of quits due to low pay, poor working condition and poor career prospects with respect to age, sex and educational level. Economic theories are also included to account for why workers quit. However, I will highlight the role of asymmetric information on turnover rates and how firms can use various mechanisms like screening and signalling to counteract this problem. Specifically, I have adopted the insurance contract model that distinguishes between two different types of workers. Via this example, we see how firms can reduce the asymmetric problem by inducing the workers to reveal his characteristics truthfully. In my paper, I have provided a glimpse as well as adequate examples on schemes that companies in Singapore use to retain staff. Much more than that, I seek to show how the emphasis should not be merely educating workers to skills upgrading but in order for Singapore to achieve significant economic competitiveness, the importance of long-term employment needs a total re-education.