Stay the course on labour restrictions

The report about Singapore losing its export competitiveness, mainly owing to rising costs and weak demand, is timely ("Singapore is losing export competitiveness: Credit Suisse"; Monday).

The key factors for rising wages in recent years, especially among lower-income Singaporeans, after a long period of wage stagnation, have been the restrictions on foreign labour and the Government's desire to promote investment in innovation and automation within Singapore businesses.

Despite the Government offering grants through agencies such as Spring Singapore and tax rebates to promote innovation, many businesses have taken the easier way out by continuing to rely on cheaper foreign labour.

Significant pay rises for those at the bottom tier coincided with the tighter controls on foreign labour.

There have been growing calls from some businesses to reverse this policy and loosen these restrictions. But to do so would be to turn our backs on the low-income and lower-middle-income earners here, and will lead to more distrust and disillusionment among them, for they will feel that their voices have not been heard.

Overcoming overdependence on foreign labour will be a key factor in achieving real productivity growth in our workforce.

This is necessary so that we can help our workers to continually climb up the value chain to keep businesses, be they multinational corporations or small and medium-sized enterprises, viable.

A wage race to the bottom, on the other hand, will be a short-term fix but a long-term disaster.

This was seen in the collapse of manufacturing jobs in the United States and Britain in the 1980s, when their governments addressed the rise in competition by stripping away the powers of unions and letting real wages decline. Cheaper real wages did not stop businesses from leaving.

Rather, we should continue to equip workers with more skills and expertise so that they get more bargaining power when it comes to keeping their jobs or getting a raise.

This will ensure that Singapore continues to be a key economic player globally.

Lionel Loi Zhi Rui

A version of this article appeared in the print edition of The Straits Times on September 03, 2016, with the headline 'Stay the course on labour restrictions'. Print Edition | Subscribe