Strong case for S'pore to continue with calibrated immigration policy

The Trade and Industry Ministry (MTI) has made a strong case for Singapore to continue with its calibrated immigration policy as the country faces the prospect of an ageing population.

The ministry outlined three broad approaches in a paper on population and the economy - released today.

In addressing the demographic shifts, the ministry said Singapore should continue to raise productivity through business restructuring and retraining of the workforce.

Two - work towards raising the resident Labour Force Participation Rate.

But the ministry said there is a limit to this.

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. 

That's because 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.

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 third strategy will have to be a calibrated level of immigration and foreign manpower - both high skilled and low skilled ones.

The paper goes on to explain the role of foreign manpower in Singapore.

The ministry 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's 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 3-4 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.

The ministry added foreign manpower also help 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% of all income taxpayers, they contribute more than 25% 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.

The ministry said calibrating the inflow of foreign manpower will be a delicate balance. 

An overly liberal access to low-skilled foreign manpower could depress wages for low-skilled jobs or encourage businesses to rely on cheap labour instead of making productivity improvements. 

Too much high-skilled foreign manpower may lead to Singaporeans feeling a sense of displacement. 

The physical infrastructure, which is being ramped up, may also be placed under stress in the immediate term. 

But the ministry explained that an overly restrictive foreign manpower policy will have a detrimental impact on both the economy and society. 

"We may have a less vibrant economy, with fewer job opportunities and lower wage growth," it said.

It added there are trade-offs Singaporeans have to bear in mind when considering the appropriate level and pace of foreign manpower inflow. 

"We have pursued economic growth not for its own sake, but for the opportunities and benefits that a vibrant economy brings," said the ministry.

This latest report comes as Singapore is putting together a white paper on Population policies, due out, early next year.