The Worker's Party released its Population Blue Paper yesterday proposing an alternative approach to PAP\s Population White Paper. Based on the WP's approach our population size will be in the region of 5.9M in 2030 from today's 5.3M. You can read the Blue Paper here.
Parts of the proposal was attack by PAP ministers during the parliament debate:
"The Workers Party's proposal to stop taking in additional foreign workers until 2020 is drastic and very risky, Second Minister for Trade and Industry S. Iswaran told Parliament on Thursday. It will speed up business closures and cause Singaporeans to lose their jobs. The economy could spiral downward, and result in a loss of the country's reputation in the business and investor community."
- BT Report on the Parliament Debate [Link]
The argument that a freeze in the influx of foreigners will cause business closures is absurd. When businesses cannot get new workers easily, they may not be able to expand as quickly as before but why would they close existing business that is profitable and has already workers. By allowing easy access to foreign workers in the past, we saw the economy over-heating during periods of expansion. Rentals and other business costs shoots up and wages come under pressure and businesses demand even more cheaper foreign labor to stay profitable. Singaporeans have seen all the deleterious effects of cost of living shooting up and wages falling behind - for this reason, Singaporeans find strong economic growth painful rather than beneficial.
As for the "loss of the country;s reputation", I think you should ask what we have promised businesses coming here. Right up to the late 80s early 1990s, Singapore attracted foreign investments because Singaporeans were the number 1 workforce in the world i.e. they came here primarily to hire Singaporeans. The world changed when China was plugged into the world trade in the late 90s. At that time, there were choices to be made on how to restructure the economy, how to be less dependent on FDI and we will compete in the world. We are here today because the PAP chose to open the floodgates to foreign labor to keep the FDI coming. None of our competitors took the same path, at least not in the same extreme way it was done by the PAP - these along with financial sector deregulation are simple brute force approaches that our competitors chose not to adopt due to foreseeable problems for its citizens in the longer term. When Minister S. Iswaran spoke about the "loss of the country's reputation", it is our reputation to allow businesses to easily hire workers from anywhere they want, retrench them easily, minimal regulation to protect workers' rights, pro-business govt controlled unions and extremely business friendly policies. All this builds up in cycle of rising dependence on FDI and foreign workers. The question for Singaporeans is whether we want to go further down this path and worsen the problems of income inequality, declining quality of life, structural unemployment, stagnant wages and poverty.
"The bottom line is that Singapore can survive economically, even prosper, without further large increases in foreign labour and immigration. A reduction in both will also deliver compensating benefits, such as lower housing costs, higher domestic consumption, lower income inequality and a less congested, more environmentally friendly city whose residents may even be willing to have more children."
- Professor Linda Lim, the Stephen M. Ross School of Business at the University of Michigan in the United States [Article Below]
The Worker's Party Blue Paper was quickly attacked by the business lobby.
"With no growth in foreign workers, the impact on the economy andSingapore's competitiveness would be disastrous. The livelihood andwell-being of Singaporeans will be compromised,"
- SBF [Link]
None of our economic competitors compete with us by importing foreign labor on such a massive scale so why do we have to resort to such extreme policies for so long? The demand by businesses for foreign workers is unquenchable. When a business becomes more competitive by hiring foreigners, its competitors have to do the same in order to compete. As more foreigners come, the pressure on our infrastructure will increase and we need more foreign workers to come to build the new infrastructure. Unless there is a freeze or severe reduction, the cycle can never be broken and the dependence of our economy on foreigners will keep growing to a point we will not have any control. As for the point that well being of Singaporeans will be compromised, let me asked what happened to the well being of Singaporeans in the last 10 years? If the well-being of Singaporeans has not been hurt, you think you can get thousands of Singaporeans to stand in the rain demanding change from the govt on 16 Feb 2013 at Hong Lim Park. Doubling of the cost of housing, stagnant wages caused by the foreign influx does not hurt the well-being of Singaporeans? The SBF is so obsessed with protecting interest of its members, it has become blind to the plight of Singaporeans.Throughout the last 10 years, the SBF was perfectly alright with Singaporean workers’ well being compromised so long as .its members benefited from govt policy ..for them to say they are worried about us when their real intention is to protect the short term interest of its members is pure hypocrisy.
There is constant rhetoric from the PAP that the WP's proposal to freeze the number of foreign will stall the badly needed build up of housing and transport infrastructure. If you read the WP's Blue Paper, it proposes not just a simple freeze in the foreign labor force, but a reallocation to sectors that need them the most such as construction from sectors where jobs are taken away from Singaporeans - this will reduce the stress on our infrastructure faster than adding 90K more each year to our population as proposed in the White Paper. If you analyse what the PAP has done last year, the measures including raising the levies of Work Permit holders for lower-skilled workers and raising the salary criteria for Employment Pass actually tightened the influx of low skilled workers to construction jobs that Singaporeans don't take and kept the influx of foreign PMETs that compete for the same jobs as Singaporeans.
We know that alternative approaches exist and can work because many countries have found alternative approaches that work - these include big and small countries with low fertility (almost all developed countries have this problem) in Asia and Europe, with or without natural resources, all competing in the same global market place as Singapore. The PAP approach cannot work for the simple reason that the majority of Singaporeans understand clearly the deleterious outcomes and will stop it in 2016 or earlier before we get to 2030.
"Of course we do acknowledge that the businesses do need to adjust and as in any economic restructuring there will be certain pains and there will be certain businesses that can restructure to meet this new environment. There will be certain businesses that are very dependent on cheap foreign manpower and they cannot survive.
"I think this is an adjustment that Singapore will sooner or later go through and we are asking for an alternative - to look at the scenario, what happens under this proposal, what is the eventual population target and then we have to look at what we have to do to help these companies make that bridge if we believe that it is important for us to have a sustainable Singapore. Then we will all have to work together to look at how to help the companies, who can adapt to this environment over a period of time. It can also be through policies, it may not be only through manpower numbers, because there are a lot of things hurting companies.
- Non-Constituency Member of Parliament, Yee Jenn Jong
The real choices are for us to make the change now or to go down the further on the trajectory proposed by the White Paper which will result in even more disruptive changes when the dependency on foreigner workers increases further and ordinary Singaporeans force a change through the ballot box because they can no longer accept the outcomes. Singaporeans have no illusions that changes now will come without pain to anyone but its is better to do it now than to pay a bigger price latter on. The PAP can continue to sell its White Paper, day in, day out on the papers and TV media that it controls ...it can keep telling us the virtues of its approach to our problems. But all the talk and all the propaganda cannot overcome what ordinary Singaporeans know from what they actually experience in their lives...that is the ultimate truth for Singaporeans .
Article: Can slower growth lead to a stronger nation?
Feb 22, 2013
PERSPECTIVE ON POPULATION DEBATE
Reducing Singapore's dependence on foreigners won't affect living standards if productivity and wages rise.
By Linda Lim For The Straits Times
THE current debate about Singapore's population policy seems to assume that fewer foreign workers and lower immigration levels will hurt economic growth and businesses - and thus Singaporeans as well.
Other affluent economies with low fertility, ageing demographics and small populations have managed to achieve continued if modest improvements in living standards without importing large numbers of foreign labour and talent. There is no reason why Singapore cannot do the same, by borrowing from technological and business process innovations that are already implemented elsewhere.
Higher productivity (more output per worker) can substitute for more workers in achieving a particular gross domestic product growth rate.
Lower aggregate growth is not just inevitable for a mature economy, given diminishing marginal returns to added inputs of labour and capital. It may also be desirable, when real income (discounting for inflation) and total well-being (reduced congestion, environmental degradation, income inequality, social unease) are considered.
Locals fuel the economy
ECONOMICALLY sustainable activities that may generate lower growth but employ a higher ratio of Singaporeans will also contribute to higher wage and domestic shares of GDP (Singapore's are currently among the lowest in the world). Simply put, a higher proportion of a given dollar of GDP will accrue to Singaporeans, so local living standards can be maintained or increased with slower growth.
Policy instruments to achieve this could include: investment incentives tied to the hiring and training of Singaporeans, and awarding work permits and employment passes only after a process ascertaining that there are no qualified Singaporeans for the jobs (standard practice in the United States).
Higher wages would encourage employers to improve productivity and attract more Singaporeans into particular jobs, giving both an incentive to invest in upgraded skills (since there will be a higher income payoff).
Businesses that cannot afford the higher wages would exit, releasing workers for those businesses that remain. A reduction in demand would alleviate any labour shortage. Fewer foreign workers would also ease pressures on the housing market and on commercial rents, so businesses may benefit from lower or more slowly rising rents even as they pay out higher wages.
Reduced foreign capital inflows to purchase property, and other investments, would mitigate asset inflation and Singdollar appreciation, thus helping to maintain cost competitiveness.
Higher wages with higher productivity together with moderating rents do not necessarily mean higher costs. But if they do, these are costs Singapore's consumers will have to pay. As consumers are also workers, their real incomes may increase with higher salaries, lower rents and mortgage payments. If those enjoying higher wages are Singaporeans (rather than foreigners with higher savings rates and remittance outflows), the multiplier impact of their local spending will be greater - their higher costs are other Singaporeans' higher income, most of which is spent in Singapore.
Better productivity, different mindsets
MANY high-income economies have trodden this path of increasing productivity before Singapore.
However, emulating their market-derived solutions requires mindset and values shifts among Singaporeans. Consider three sectors in Singapore that are labour-intensive, and usually considered low-wage, low-skilled and low-productivity jobs that "Singaporeans don't want to do".
First, the construction industry: in no other high-income country is this associated almost exclusively with foreign labour from neighbouring countries.
In the US, this is a high-wage, high-skill, capital-intensive industry employing mostly unionised native workers, with high safety standards, sophisticated equipment and processes. Construction workers earn at least twice the median national wage in the US state I live in; their hourly wage is probably three times higher.
Some Singaporeans would be willing to work in this sector if adequately compensated, while construction firms would employ them at high wages if productivity was sufficiently high.
Second is the food and beverage (F&B) industry. In even high-immigrant big cities and on the coasts of the US, most restaurant workers are Americans. They include students or mature individuals (mothers, retirees) working part-time for extra income or social interaction, as well as seasoned professionals for whom this is a full-time, long-term career. Skills in conversing, understanding customers, knowledge of the menu and wine list are required and rewarded, with tips that average 20 per cent of the bill and can be much higher. There is a strong monetary incentive to develop skills and even a personal brand, and aspiring job candidates often queue up for months and even bid (pay) for the privilege of waiting tables at expensive restaurants. In the kitchen, much food preparation has been automated and outsourced to specialist food services such as Sysco.
In Singapore, the use of temporary foreign workers and the standardised service charge has kept wages and upward mobility low, thus discouraging the participation of Singaporeans in this sector
Third is the domestic service industry of household help, care for children, the elderly and disabled.
This is a heterogeneous sector, but nowhere in the rich world is the dominant mode of operation that of the individual maid bound to a single individual or household. Rather, professional services of house maintenance, cleaning, food preparation and delivery, child and elder care and transport are the norm, compensated at hourly rates many times the minimum wage. Many self-employed workers in this sector simultaneously serve multiple clients, some for many years at a stretch or to work part-time, while private enterprises employing such workers provide a range of customised services.
Many offering child and elder-care services are personally dedicated to helping others, or are training for careers in teaching or nursing. Foreign workers in both this sector and F&B are usually new long-term immigrants, not temporary guest workers, so integration into the majority society is only a matter of time.
Improving wages, status
IN ALL three sectors, much higher wages would both attract more workers and encourage investments in higher productivity methods.
But there is also a mindset shift required, which is the social status and value collectively ascribed to such occupations.
In the US, social barriers are highly permeable and there is respect for hard work, enterprise and professionalism even in "blue collar" or manual service occupations, helped by the fact that they may pay better than many "white collar" jobs.
A social egalitarian ethic in Europe, and national group solidarity in Japan, both regions with limited income inequality, fulfil the same role. More money alone cannot compensate for lack of respect, which in Singapore is inordinately directed by and towards those with academically based credentials and professional achievement.
This analysis could be extended to many other occupations, such as highly compensated "skilled trades", and personal services (such as the beauty and wellness industry), which are particularly attractive to self-employed entrepreneurs.
Many solutions are possible but businesses will be motivated to innovate only if the easy alternative of importing low-skilled, low-wage foreign labour is restricted. Innovations could be accelerated by temporary public subsidies that would not cost more than the investments in the housing and transport infrastructure required to accommodate a larger population.
Slower growth, stronger nation
THE situation at the higher end of the labour market is more complex, given the global or regional role many companies fulfil from their Singapore base and the geographically mobile talent that they may require.
Employment passes should be flexibly awarded according to the need and value to the nation of a particular company. Businesses should professionalise human resource practices to maximise recruitment of Singaporeans, for example through school or university partnerships and campus recruitment efforts.
The bottom line is that Singapore can survive economically, even prosper, without further large increases in foreign labour and immigration. A reduction in both will also deliver compensating benefits, such as lower housing costs, higher domestic consumption, lower income inequality and a less congested, more environmentally friendly city whose residents may even be willing to have more children.
Businesses and people can adjust to slower labour growth as they do in other countries. The nation - which is more than its GDP - will be the stronger for it.
The writer, a Singaporean, is professor of strategy at the Stephen M. Ross School of Business at the University of Michigan in the United States.
Article by Lucky Tan on his blog Diary of a Singaporean Mind.
