28 October 2016
Demographic storm clouds gather over Singapore's economy as the city state celebrates the 50th anniversary of its independence. Photo: AFP
Demographic storm clouds gather over Singapore's economy as the city state celebrates the 50th anniversary of its independence. Photo: AFP

Singapore grapples with immigration issues in jubilee year

In five years, the number of Singaporeans retiring will exceed that of those starting work.

By 2025, as a result of one of the world’s lowest birth rates, the population could contract.

A likely scenario: hiring will get tougher, firms will move out, and the miracle years of Singapore’s economy will be history.

To avert the demographic crunch outlined in a government white paper about two years ago, immigration would seem like an easy fix.

But instead, the government has slashed foreign labor quotas in response to concerns among some Singaporeans that they are being squeezed out of the job market, Reuters reported.

On Sunday, Singapore will mark half a century of impressive economic growth.

But progress in the next few years will be less momentous.

The government expects growth to be less than half the 8 percent average rate of the past 50 years.

It said a shrinking workforce could make things even worse.

Restrictions on foreign workers have worsened a labor crunch, particularly in the manufacturing, services and construction sectors, in a country known for its business-friendly policies.

The curbs cut inflows of foreign workers to 26,000 last year, excluding domestic helpers. That’s a third of the 2011 figure.

“Is this painful? Yes, it is,” Victor Mills, chief executive of the Singapore International Chamber of Commerce, told Reuters.

“Because for well over 30 years, businesses in Singapore had allowed themselves to become addicted to endless supplies of cheap, foreign labor.”

Over the years, as Singapore industrialized and transformed itself into a major electronics manufacturer and a global oil trading hub, demand for workers increased and immigration rules were relaxed.

The small island state has laid out plans for its economy to rise up the value chain and boost the productivity of its workers.

Prime Minister Lee Hsien Loong was quoted by the Straits Times newspaper as saying earlier this month: “There are trade-offs.

“If we have no foreign workers, our economy suffers, our own lives suffer.

“[If we] have a lot of foreign workers, the economy will do well, we have other social pressures, other problems.” 

Lee said the government will review the foreign labor situation in a few years.

Immigrant restrictions accelerated after the 2011 general elections.

The ruling People’s Action Party suffered the biggest drop in its share of the vote ever, hurt by anxiety over rising income inequality, high housing costs and overcrowding of public transport because of the influx of foreigners.

Whether the large disgruntled minority has been adequately appeased will be known when Singaporeans go to the polls, expected by the local media to take place as early as next month.

The government expects a “new normal” of economic growth of 2-4 percent per year until 2020, or an average of about 3 percent, Finance Minister Tharman Shanmugaratnam said in April.

“However, achieving even 3 percent growth on average will be an increasing challenge, as our labor force slows down in the years to come,” Tharman said.

Singapore-based conglomerate Keppel Corp. Ltd., one of the world’s largest builders of offshore rigs, said last month it has invested in its overseas facilities to increase production capability, as it is unable to meet its labor requirements locally.

“Some of the work which we can’t do in Singapore, we will be shifting to our overseas yards,” chief executive Loh Chin Hua said.

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