Commenting on the spike which has become a bone of contention
among many Singaporeans, Prof Hui says: ‘Their numbers suddenly
surged. That surprised everybody.’
This was attributed to the extraordinary growth in 2007 and
first half of last year, which led to record-busting job creation
of more than 200,000 each year.
Of the 235,000 jobs added in 2007, six in 10 went to foreigners.
The ratio rose last year, with foreigners taking seven in 10 of the
222,000 new jobs.
This means that almost 300,000 foreigners flocked here to take
up jobs in the past two years, pushing their population past the
one million mark for the first time.
There are no official figures on the types of jobs taken by
foreigners.
But, Prof Hui says candidly: ‘There is a realisation that too
many have been brought in over the last two years.
‘I would expect that quite a number of them were low-skilled
workers, which caused not only a depression of wages but also some
social problems too.’
Housing the foreigners also became a controversial issue when
residents protested against the siting of dormitories in their
neighbourhoods.
The influx of higher-skilled foreigners here also had an impact,
the economist notes, citing the increase in property prices as many
of them rented or bought homes here.
In fact, foreigner numbers were so unexpectedly huge that they
skewed his 2004 projections. Singapore’s foreign working population
hit the level projected for 2019 in 2009, 10 years ahead of
schedule.
It is thus not surprising that now, as in 1982, the Government
is looking at reducing the country’s reliance on foreigners. The
only difference this time is its recognition that they are here to
stay.
Singapore, Prof Hui says, has the third-largest share of
foreign-born persons in its population of any country, after the
United Arab Emirates and Kuwait.
It is inevitable that foreigner numbers will continue to swell,
but the key is how many the country can accommodate and how fast it
wants to grow.
‘Maybe we went overboard in trying to maximise growth… in a
sense, it’s fortunate that we have the recession that caused a
rethink of this policy,’ he says.
Low skills, low pay
TO PROF Hui, the pertinent question is: Why did Singapore allow
so many foreigners to come in?
The underlying rationale, he reasons, was to maximise growth at
any cost.
‘For the investments that were brought in, the criteria were
more to generate growth. I’m not sure if attention was paid to
manpower requirements,’ he chides in his gentle tone.
This, he argues, has led to more low- skilled and cheaper
foreign workers on work permits. Their presence, in turn, has
depressed the salaries of low-skilled Singaporeans.
It is not a new trend, and policymakers are aware of it, he
notes.
Indeed, government labour reports show that wages of workers
such as cleaners and labourers have stayed stagnant or even
declined in the past decade, while the wages of higher- skilled
workers rose.
As further proof, he pulls out a table he compiled, comparing
the wage gap in 20 developed countries in 1996 and 2006.
Singapore had the biggest gap in both years. It also had one of
the fastest widening gaps: In 1996, the top 10 per cent earned 4.9
times the income earned by the bottom 10 per cent; in 2006, that
proportion had increased to 5.7.
To remedy this, he urges the Government to re-examine its policy
of bringing in large numbers of low-skilled foreigners.
‘Would we want to have industries in Singapore where you bring
in many low- skilled and low-wage jobs which will impact on local
workers?’ he asks.
‘Or do you want to be more circumspect in the kinds of foreign
investments you bring in to ensure that they do not require
excessive low-wage labour?’
Drawing a distinction between moderating growth and maximising
growth, he adds: ‘When you maximise growth at any cost, you may not
focus so much attention on the quality of growth and jobs
created.
‘But if you moderate growth, you would want to generate jobs
that are of high value. It won’t be just numbers per se, but
creating quality jobs.’
As for higher-skilled foreigners on S-pass or employment pass,
he stresses that employers should be made to justify why they need
to hire them. The employers must show that they have tried but
failed to find local employees. This way, local graduates, who are
forming a bigger proportion of the unemployed lately, will have a
fighting chance to land the job.
Lower growth, fewer foreigners
TO REDUCE the number of foreigners needed, Singapore has four
policy options to consider.
The least helpful is raising the fertility rate as that is
almost impossible, according to Prof Hui.
He believes the best solution is a combination of moderating
growth and improving productivity.
His proposal has a prescient air about it as some government
policies seem to be heading in the same direction.
For example, the Government has introduced a national
productivity boost, with even the labour movement calling on
companies to be ‘cheaper, better and faster’.
Recent speeches by government leaders have also been consistent
in highlighting the prospect of slower growth, reminding citizens
that there is a trade-off between fewer foreigners and higher
growth. It is almost as if the Government is priming people for
slow growth ahead, some say.
To Prof Hui, even the Government’s targeted annual growth rate
of 5 per cent ‘may be too high’.
He believes a more sustainable annual rate is between 3 per cent
and 4 per cent.
According to his data, shaving economic growth by one percentage
point to 4 per cent a year could halve the number of foreign
workers needed by 2030.
This would also mean less strain on resources such as land,
housing and transport.
‘We can maximise growth… but it could be at the expense of
higher housing and transport costs,’ he says.
Some might argue that lower growth could lead to lower living
standards, but he does not agree.
A lower annual growth rate of 4 per cent would result in real
gross domestic product (GDP) per capita sliced by $5,000 to $87,000
in 2030.
‘But GDP per capita is not directly related to living
standards,’ he insists.
With fewer foreigners, he contends, Singaporeans might even have
a higher quality of life as they have a less dense living
environment and cheaper housing.
The density level in Singapore, he notes, is already the fourth
highest in the world now.
As for raising productivity levels, his data found that
increasing it by one percentage point to 3 per cent each year could
also almost halve the demand for foreigners.
This means more can be produced with fewer workers. But while it
is a desirable option, it is ‘elusive’, as past experience shows
that there is no direct correlation between policy efforts to raise
productivity and actual outcomes.
He also points out that productivity is currently on the
decline, and getting it back into the positive range will be tough
– let alone increasing it to 3 per cent.
The other solution would be getting more older folk back to
work, thus growing the pool of local workers.
By drawing on 25 per cent of the economically inactive seniors,
aged 55 and above, who are currently not working, the need for
foreign labour could be cut by as much as 25 per cent immediately,
he says.
But the impact would decrease over time, to about 10 per cent by
2030.
This move, however, is also not that simple. It requires the
cooperation of older folk who want to work, and companies that want
to hire them.
Dual citizenship for S’poreans?
AS THE Government mulls over the various ways to reduce its
dependence on foreigners, it should reconsider how best to retain
local talent.
Prof Hui pulls out yet another table – this time on emigration
to four main destinations – Australia, Canada, the United States
and the United Kingdom.
Around 4,000 Singaporeans seek permanent residency in these
countries that they live in each year, and another 1,000 give up
their Singapore citizenship to acquire the citizenship of those
countries.
If the number of new entrants to the labour market each year is
estimated at 30,000, then the 5,000 Singaporeans who seek residency
elsewhere would represent an annual loss of 15 per cent of
Singapore’s workforce additions.
And they are usually the talents Singapore would want to
keep.
Why not offer dual citizenship, he suggests, as a way to retain
them so that the country would not lose the 1,000-plus citizens who
give up their citizenship.
It is an idea that has been debated in Parliament and dismissed
by the Government, which is concerned about divided loyalties and
whether it could prompt even more Singaporeans to take up other
citizenships.
But he believes it is time to revisit the topic, as the world
becomes more globalised and the borders more porous.
