SINGAPORE: The Ministry of Trade and Industry (MTI) has made a strong case for Singapore to continue to make fine adjustments to the inflow of foreigners as the country faces an ageing population and dwindling workforce.
It also stressed that the days of high economic growth are over.
The time now, it said, is for Singaporeans to come to a consensus on the appropriate level of growth for the next 10 to 30 years.
Based on the country’s stage of development, Singapore’s Economic Strategies Committee has said that a GDP growth of between three and five per cent a year is a healthy target to aim for.
It exceeds those of most advanced countries that typically grow by two to three per cent.
But to achieve this, there needs to be rethink of growth strategies, especially against the backdrop of a shrinking workforce.
The ministry outlined three broad approaches in a paper on population and the economy, released on Tuesday.
Firstly, MTI said Singapore should continue to raise productivity through business restructuring and retraining of the workforce.
Secondly, the country should also work towards raising the resident labour force participation rate. However, the ministry said there is a limit to this.
The third strategy is to have a calibrated level of immigration and foreign manpower —— both for high—skilled and low—skilled workers.
While Singapore can strive to raise its resident work force participation for example, getting more women to work and keeping the elderly employed, there are limits to this.
For example, Singapore’s male labour force participation rate is already one of the highest in the world, at 92.1 per cent for those aged 25 to 64.
While a percentage point increase in the labour force participation rate will add about 30,000 resident workers to Singapore’s labour force of 3.2 million, it is not possible to continually increase the figure by one percentage point every year.
Then there are those who will not enter the workforce due to family and other care—giving priorities.
"Nonetheless, we should continue to strive to ensure that those who wish to work can do so, and to introduce suitable policies that can help residents to remain economically productive, no matter what their personal circumstances may be," said MTI.
So, the need to turn to foreign manpower which is needed in sectors where locals cannot fill.
Hudson’s executive general manager, Andrew Tomich, said: "All organisations actually ask for local talents but unfortunately, in Singapore, it’s really tough to find local talents that can move into these roles. So we do need to go outside of Singapore to find that talent and bring them in. Obviously, the local talent is the key but obviously we can’t always find that so we need to be investing in, bringing in that high calibre talent to Singapore, to really pass that skills and knowledge to organisations and that country itself."
Trade and Industry Minister Lim Hng Kiang said: "If you take away the foreigners, if you take them away from starting of new sectors, you lose that sector. You don’t get the jobs.
"If I don’t allow the foreigner to come in, to start the BMS (bio medical science) sector, the aerospace sector, and I say look I must have 100 per cent Singaporeans before I introduce a new sector, then my response to you is it’s very difficult and you may never have that sector.
"Second, complementing Singaporeans, talk to your SME bosses. They hire 30 to 40 per cent workers, it brings their cost down, let’s be realistic, it helps them to compete. You say no, you cut it back, and if you do so sharply, then many of them will just have to close their business or relocate somewhere where they can continue to be cost competitive. So the local workers that they employ right now, will have to lose their jobs and have to find jobs elsewhere."
For the first time, authorities have revealed the distribution of foreign workers in the economy.
While many go to construction and manufacturing, the bulk — 41 per cent or more than 400,000 foreign workers — go to the services sector like F&B, retail, finance, landscaping and security.
The ministry said most are transient workers.
And while some Singaporeans may have expressed concerns about the presence of foreigners depressing wages, taking away jobs and even encroaching on space, Mr Lim noted that it’s a different argument when you look at the sectors which these foreign workers are contributing to.
"So it depends which sector you talking about. So I think what this paper tries to address is instead of this generality that I am unhappy with foreign workers, well, talk about your sector. Which sector are you in, are you in the healthcare sector? Are you receiving services from the healthcare sector? Well, if you got no foreign workers, be prepared to pay higher cost."
The ministry also estimates that by 2030, the number of Singaporeans who are professionals, managers, and executives (PMEs), as well as technicians and associate professionals (TAP) will rise.
So, there will be a continued need for foreign workers in low—skilled jobs, to complement the resident workforce.
High skilled foreign manpower will also help companies as they restructure to meet the needs of the new economy.
The ministry said that is because the skills and capabilities that new industries need may not always be immediately available in the Singaporean workforce.
"As there is often a minimum of three to four years from course commencement to graduation, it will take that long before we have graduates with the necessary skills for these industries. An even longer time is required to train experienced supervisors and managers in these fields," said MTI.
The paper said having a "readily—available foreign manpower with the necessary skill sets" allows Singapore to anchor these emerging industries, while the country develops the pipeline of Singaporean workers.
MTI added that foreign manpower also helps to cushion Singaporeans from unemployment during downturns. This was seen during the recession years of 2008—2009, as well as post—911 and the SARS period.
The foreign workforce also contributes to Singapore’s taxes. The ministry said while foreigners currently account for about 20 per cent of all income taxpayers, they contribute more than 25 per cent of Singapore’s total personal income taxes.
Foreigners living and working in Singapore also add to the GST tax base. "Their tax contributions increase the fiscal resources for government to meet various public expenditure needs, including social programmes and transfers to maintain a progressive fiscal system," said MTI.
Mr Lim also warned of the consequences should Singaporeans choose the path of even slower growth.
"At the end, this is a national conversation, if Singaporeans say no, we are not interested in three to five per cent growth, we want one per cent, well that’s the outcome of the exercise, then we just have to be sure that everyone goes into it with a clear mind, we understand the trade—offs and you’re taking that trajectory. I’m explaining that managing slower growth is far, far more difficult than managing a decent, appropriate sustainable growth. When you are doing that one per cent or one—and—a—half per cent, you are playing around with stalled speeds most of the time," he said.
The National Population and Talent Division is also putting together a white paper on population policies, due out early next year.
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