SINGAPORE - Jobs for Singaporeans will be lost and socio-political problems could flare up if the country does not control the number of foreign workers, said Senior Minister of State for Trade and Industry Chee Hong Tat.
Mr Chee told Parliament on Tuesday (Feb 26) that such problems have occurred in other countries, which is why the Government reduced the foreign worker quotas for the service sector despite its impact on some companies.
His response came after several MPs questioned the decision to lower the Dependency Ratio Ceiling, a quota setting the maximum number of foreign workers a firm can hire for every full-time local worker it employs, in 2020 and 2021 for the service industry.
They warned that the move would raise costs for several firms already struggling with a labour crunch, particularly those in the areas of accommodation, information and communications, food services, retail and professional services.
Mr Chee said: "We knew it would be painful for the affected companies, and we agonised over this difficult decision during our many rounds of inter-ministry discussions."
Ultimately, the Government decided that it was better to make a move now to control the overall number of foreign workers before the problem gets out of hand.
He said the Government was aware of labour constraints in the service sector and how some firms have begun investing in productivity improvements, working closely with government agencies and industry associations.
"The hard work is starting to bear fruit and we need to keep it up," added Mr Chee, noting how productivity has been steadily rising across sectors.
It rose 4.4 per cent for the accommodation segment in each year from 2013 to 2018, 3.2 per cent for retail trade and 1.4 per cent for food services. Total manpower in the accommodation sector fell by 1 per cent in that period while total room stock went up 4 per cent.
While technology cannot fully take over human roles, companies need to understand how it can improve products, reduce costs and raise service quality, said Mr Chee, adding that taking no action would mean firms being overtaken by their competitors.
The Government will increase its support to help businesses transform, and has worked with industry associations for this purpose.
For example, the Productivity Solutions Grant will be enhanced to subsidise up to 70 per cent of out-of-pocket training expenses of eligible companies, up to $10,000. Firms can also access up to 70 per cent of government funding for enterprise transformation projects through an extended Enterprise Development Grant.
The Ministry of Trade and Industry's Pro-Enterprise Panel has been working with industry associations and companies to review regulations and look for ways to reduce licensing costs, Mr Chee noted.
Change can be a daunting and difficult challenge for businesses, he added, but there is support if companies are willing to take that step. "Government agencies and industry associations will walk this journey together with you - this is our commitment to our companies.
"If you want to transform and you are willing to put in effort to do so, we will help you," he said.