Ensuring all workers are quality workers

Raising the skill of foreigners in Singapore is a knotty issue - Singaporeans worry it would intensify competition for good jobs. PHOTO: ST FILE

As Singapore looks to stay ahead of the curve in developing its industries to compete globally, the shift towards higher value-add foreign workers is something that the Government wants to encourage.

But raising the skill level of foreigners in Singapore is a knotty issue - Singaporeans worry it would intensify competition for good jobs.

Minister in the Prime Minister's Office Chan Chun Sing says the answer is to ensure locals are quality workers, too.

"We cannot dumb everybody down, right? That's why we work so hard to move our people up."

In an interview with Insight, he recounts an occasion when he asked a student about the type of foreign worker he would want to work with - above average or below average.

The student answered: "Above average but below me."

This shows that he knows good talent is needed for the country to progress, but he also feels the tension, says Mr Chan, who is secretary-general of the National Trades Union Congress (NTUC).

Thus, the way forward is to level up locals. "The Singapore average must be above the regional and global average," he says.

On the issue of bringing in higher-skilled foreigners, he gives the example of the construction sector, which employs more than 300,000 foreign workers. If it raises productivity by 1 per cent, those jobs could be replaced by 3,000 foreign information technology, wealth management or biotechnology professionals instead, helping to boost Singapore's capabilities in these areas.

At the same time, companies here which employ such professionals should help transfer expertise to locals, he says.

"I've no problem employing the high-skilled foreigners to come here - we have done that ever since the 1960s - but there must be a process of localisation whereby my own domestic workers, my own local workforce, can progress," says Mr Chan.

One government effort in this area is a pilot scheme started last year called the Capability Transfer Programme, which subsidises the cost of companies bringing in trainers from abroad to arm local workers with skills and knowledge of new technology.

But the question of quality is part of the puzzle.

The number of foreigners working here was also a major issue earlier in the decade, when Singaporeans were concerned about competition for jobs and the strain on infrastructure.

Although there is no fixed formula for success, the balance of two locals to one foreigner in the workforce looks set to stay for now.

Both Mr Chan and Second Manpower Minister Josephine Teo reiterate that this ratio is about right.

"There's no magic number but where we are at the balancing point now is about one-third, two-thirds," says Mr Chan.

The local workforce, comprising Singaporeans and permanent residents, is about 2.3 million in size now. There are another 1.4 million foreigners working here.

Local workforce growth has been slowing due to the ageing population, even as more women and older workers take on jobs.

Last year, it expanded by an estimated 0.9 per cent, slightly better than the rates of 0.5 per cent and zero in the previous two years, but down from 4.4 per cent in 2014.

By 2020, the size may well be stagnant, says Mrs Teo, in a separate interview with Insight.

And with tighter foreign labour policy and contractions in industries like construction and marine, the growth of the foreign workforce has slowed too - the estimate for last year shows it actually shrank.

Taken together, these trends mean that employment growth can no longer be relied on to drive economic growth.

So to keep the wheels moving, productivity will have to go up.

This is because economic growth comes from employment growth, which is how fast the workforce expands, and productivity growth, which is how much additional output each worker can produce.

"The more you are able to do productivity-driven growth, the less dependent you are on manpower growth, which works to our advantage," says Mrs Teo.

One programme to encourage this is the Lean Enterprise Development Scheme, launched in 2015 to help businesses reduce their reliance on manpower through using technology and changing operating processes. It has been tapped by over 5,200 enterprises.

Such efforts could be paying off - last year, economic growth of 3.5 per cent was almost completely from productivity growth.

So it is possible to maintain flat employment levels, with no increase in the number of locals or foreigners, but that may not be ideal. Realistically, the workforce needs a little bit of growth to support "enterprise activity", says Mrs Teo.

Monetary Authority of Singapore managing director Ravi Menon also said at a recent conference that while the share of foreigners in the workforce cannot increase without end, there must be some flexibility in the local-to-foreigner ratio to match economic cycles, changing circumstances and opportunities.

Mrs Teo explains: "An economy must be able to accommodate activity by new businesses and existing businesses getting into new lines of businesses.

"If the only way in which businesses can grow is by taking employees from other businesses, there will be more friction. So you have to allow for a little bit of growth."

Joanna Seow

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A version of this article appeared in the print edition of The Sunday Times on February 11, 2018, with the headline Ensuring all workers are quality workers. Subscribe