The curbs on foreign manpower are a bitter pill to swallow, but an inevitable catalyst for a rise in productivity, said Second Minister for Home Affairs and Trade and Industry, Mr S. Iswaran, yesterday.

Mr Iswaran was speaking at an SG50 luncheon hosted by the Singapore International Chamber of Commerce (SICC) at the Grand Copthorne Waterfront Hotel. The SICC was celebrating the completion of its 174th annual general meeting.

Referring to the manpower shortage in industries such as the food and beverage sector, Mr Iswaran told his audience: "If you did not have a constraint, there would be no impetus for change, and we need to make that change in order to be sustainable in the long run."

He added: "We will continue to invest in the education, training and development of our workforce to ensure that they have the relevant skills." Human resources should be a "strategic function" to optimise employee contributions, he said.

He called the labour crunch an opportunity for resource reallocation, and encouraged firms to look to technological and human resources solutions to lift productivity.

SICC chief executive Victor Mills agreed with Mr Iswaran's assessment of the manpower curbs.

"For 30-odd years, businesses have got used to relying on cheap foreign labour," Mr Mills said. This dependence depressed wages, shut out local workers, and removed any incentive for change, he said.

Freshly appointed SICC chairman Chaly Mah, chief executive of Deloitte South-east Asia, said the chamber's priorities for the coming year included diversifying the workforce in terms of gender, age and national origin, which would help to grow the labour force participation rate.