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Foreign workforce: Good or bad?

Image credit: Singapore Tourism Board.

Imagine you are a part of the Economic Development Board (EDB) senior management. You are to decide on an item that has been put up for discussion. The issue at hand is whether EDB should facilitate Company X to bring their business to Singapore. Here’s some information you have to evaluate:

Company X wants to start a new facility in Singapore, which will create a total of 1,000 jobs in Singapore in an emerging industry with high potential for growth. As it is still an emerging industry, 600 of these jobs will need to be filled by foreigners as Singaporeans do not have the necessary skills yet and would need to be trained. Singaporeans will fill the remaining 400 jobs. 

Would you say yes or no to this company? 

If you said yes

We would immediately create 400 new jobs for Singaporeans. And these jobs are in a sector with high growth potential, providing good career prospects and wages. Hurray! 

This would also be good news for our economy, as by plugging into an emerging field, we may be creating the next sector to power Singapore’s progress. A first-mover advantage is always good when it comes to global competition. If the industry and sector grows, more jobs would be created; productivity could increase. There would also likely be positive spillovers to other sectors, such as finance and legal services, which provide important support services to businesses in Singapore. 

Of course, there is always the risk that this industry may not take off. We cannot predict the future, but will have to make the best decision and manage the risks, based on today’s information. 

A potential downside, however: bringing the company to Singapore would mean adding 600 more foreigners to our total population. There could be an increased sense of job competition with some of these foreigners taking on jobs which Singaporeans aspire towards but do not have the necessary skills yet. We can train up Singaporeans but this will take time.

If you said no

Company X would open their facility elsewhere. Our foreign population would not increase, though we would also have lost 400 jobs for Singaporeans.

We could always wait for the next growth opportunity where more jobs would go to Singaporeans. But this is a risk to take, as opportunities may not knock twice. Singapore is a small economy, and we are the price-taker in many if not all instances. We would need to be careful not to signal to existing and potential businesses that Singapore is becoming less business-friendly.

Being an open economy brings opportunities for Singaporeans

The scenario may be a simplified version of reality today, but it illustrates the key dilemma that economic agencies have to grapple with. Either option has its benefits, costs as well as risks. But one thing is for sure – what the economic agencies and decision-makers want at the end of the day is to create good jobs that meet the rising aspirations and improve the lives of Singaporeans. 

Being an open economy has immense benefits and Singapore has benefitted greatly. Take for instance MNCs like Johnson & Johnson and Procter & Gamble that have chosen Singapore as their regional headquarters. They have expanded and set up innovation and leadership development centres here. These have in turn provided Singaporeans with exciting jobs with global opportunities. Allowing more of such companies into Singapore will enable us to grow the economic pie.

Foreigners who work here also contribute taxes. While foreigners make up 20% of all income taxpayers, they contribute more than 25% of our total personal income tax collections.  These will in turn lead to surpluses that can then be redistributed to segments of our local population that might not have benefitted directly. 

MNCs like Johnson & Johnson and Procter & Gamble have chosen Singapore as their regional headquarters. These have in turn provided Singaporeans with exciting jobs with global opportunities.

Not so quick you might say!

What about stories of foreign professionals who steal our jobs and companies that hire their own kind? 

It is understandable for Singaporeans to have concerns on job competition. And there are cases of “black sheep” companies and hiring managers who have discriminatory hiring practices. These cases may be few and far between; appropriate actions may have been taken against them. But such anecdotes, however sketchy they may be, can be unnerving and upsetting. 

Singapore has emphasised the principles of fairness and meritocracy in the last 50 years of nationhood. We need to preserve and reinforce these principles as our workforce becomes more diverse. The Tripartite Alliance for Fair Employment Practices (TAFEP) promotes fairness at the workplace, and investigates complaints against discriminatory workplace practices. The Fair Consideration Framework was also set up to require all firms to consider Singaporeans fairly for job vacancies, and to put in place employment practices that are open, merit-based and non-discriminatory. Actions have been taken for companies which were found guilty and some have had their work pass privileges curtailed. In short, there is no room for discrimination and unfairness at the workplace.

The key to achieving higher wages for Singaporeans lies in preparing our people with the right skills and mindsets to do well in the global marketplace. Our ITEs, Polytechnics and Universities regularly revamp their curriculum and keep pace with industry developments, to ensure that our graduates are workforce-ready. SkillsFuture also ensures the constant skills upgrading of Singaporeans so that they remain relevant and are sought after by employers. In addition, there are measures to facilitate knowledge transfer from foreign expertise to our local workforce so that Singaporeans can eventually take over these jobs. Through these means, we can position Singaporeans to take on the good jobs that are created in our open economy.

The key to achieving higher wages for Singaporeans lies in preparing our people with the right skills and mindsets to do well in the global marketplace.

One such example is the biomedical industry, which grew rapidly between the 1990s and 2000s. Between 2002 and 2012, employment in the biological and pharmaceutical products industry grew by 14 per cent. At the same time there was a decrease in the share of foreign professionals in the industry, showing evidence that over time, more Singaporeans are trained and able to take up the good jobs in the industry which used to rely more heavily on foreign expertise. 

How about lower to mid-skilled foreigners?

From nurses doing shift duties at the hospitals, workers keeping our maritime ports bustling through days and nights, construction workers toiling under the sun to build our HDB flats and MRT network, to domestic helpers looking after our families while we are at work - many foreign workers have chosen to leave their homes to work in Singapore. We must also not forget the foreign staff supporting the manpower needs of our F&B outlets given that dining out has become an important part of Singaporeans’ lifestyle.

Of our total foreign workforce, 4 in 5 of them are lower to mid-skilled foreign workers, typically holding Work Permits or S Passes. 

Some of us may feel that these lower to mid-skilled foreign workers have difficulties adjusting to the Singaporean way of life, or they too steal our jobs and depress wages. But there are also some who would agree that these foreign workers have contributed to improving the quality of life we enjoy today while keeping the costs of services affordable. These foreign workers also help meet the needs of our rapidly ageing workforce and population.

The inflow of foreign workers is being calibrated by encouraging businesses to raise productivity and be less reliant on foreign workers through careful tightening of foreign workforce policies.

What do foreigners bring to the table?

So going back to the key question. Foreign workers can bring with them different skills, experiences and knowledge that are complementary to the local workforce. They support our social and development needs, as our population ages and as we roll out infrastructure projects to improve our living environment.

Foreign workers play a complementary role to our local workforce and support our social and development needs.

With an open economy and increasingly diverse workforce, it is even more important to preserve and reinforce the principles of fairness and meritocracy in the workplace. We should also respect everyone, locals or foreigners alike, regardless of skills level, and learn to understand and accommodate our differences as we work alongside each other at work. This way, we can create a strong and cohesive society so that Singapore continues to flourish.

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