December 1, 2009 by admin
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Written by Our Correspondent
DBS economist Irvin Seah had spoken out against the Singapore
government’s foreign worker policy. He said that low-wage foreign
workers have contributed to the widening of the income gap as they
are more willing than local workers to accept less pay for
lower-skilled jobs.
According to Mr Seah, some Singapore workers are struggling to
keep pace as the economy develops and are in danger of losing their
jobs.
His comments came in the aftermath of the release of the
Singapore Competitiveness Report which showed that Singapore’s
labour productivity – measured in terms of total output per
employee – lags that of developed countries including the United
States, France and Norway, as well as Asian neighbours Hong Kong
and Taiwan.
The report also found that productivity here is falling in the
sectors of manufacturing, construction, hotels and restaurants,
business services and wholesale and retail trade – which, taken
together, employ two-thirds of the workforce and make up 60per cent
of the economy.
Another economist who declined to be named suggested the
increasing number of foreign workers as a cause for the lower
productivity:
“One reason for the lower productivity may be the large
influx of foreign workers in recent years. With more workers
available, each worker doesn’t have to work as hard,” he
said.
Citigroup economist Kit Wei Zheng said that Singapore’s rapid
growth over the last few years has been mostly driven by a massive
increase in the workforce.
“Between 2006 and last year, the number of workers in
Singapore jumped an average 6.5per cent a year, largely due to
liberal immigration policies……But it is clear that growth powered
by importing foreign labour is simply not sustainable,” he
added.
Foreigners accounted for a third of the three-million-strong
labour force om 2008, up from only a quarter in 2004.Singapore’s
economy boomed correspondingly with average growth of 8.2per cent a
year between 2004 and 2007.
But while sheer numbers have fuelled growth, the actual
productivity of each individual worker has fallen.
The Economic Strategies Committee, set up to find new ways for
Singapore to grow over the medium term will look into the problem
of the declining productivity of Singapore workers.
Singapore’s income gap is the highest among developed countries
after Hong Kong whose figures are skewed by an exceptionally higher
number of billionaires.
The worsening income gap between the poor and rich was
accentuated by the relentless influx of low-wage foreign workers
into the labor force.
MM Lee Kuan Yew dismissed the significance of Singapore’s
widening income gap during a recent ministerial forum at NUS. He
opined it is more important to create jobs for Singaporeans.
Despite the rising resentment and disgruntlement on the ground
at the government’s liberal immigration policy, senior leaders
continue to insist that foreigners are essential to Singapore’s
continued growth, as measured by GDP growth figures.
A substantial portion of Singapore ministers’ multi-million
dollar salaries are pegged to GDP growth as defined by the market
value of all final goods and services made within a country in a
year.
Low-wage foreign workers keep business costs down, thereby
helping to boost the performance of the economy and indirectly
contributing to GDP growth, but it does not enhance labor
productivity.
With diminishing returns over time, Singapore’s over-reliance on
low-skilled workers is unlikely to sustain its economic growth for
long.
