The tough balancing act of welcoming foreign talent and assuaging Singaporeans' concerns

SINGAPORE, June 8 — One of the toughest balancing acts that successive Singapore’s leaders have had to manage over the decades is to bring in foreign talent to the city-state while mitigating the inevitable tensions that come with it.

Way back in the 1980s, founding prime minister Lee Kuan Yew had already spoken of the need to bring in skilled foreigners to spur Singaporean workers, and of the importance of expanding the talent pool given Singapore’s small population.

Some 40 years later, when Singapore was on the cusp of leadership change in May, both the incumbent prime minister and his successor would also broach the thorny issue.

Lee Hsien Loong, in a media interview before handing over the reins to his deputy, Lawrence Wong, described managing the “inherent tensions” between wanting social cohesion and bringing in immigrants as “the most difficult” issue he has had to handle during his 20-year tenure as Singapore’s third prime minister.

Wong, who assumed the premiership on May 15, told The Economist weekly in an interview on May 6 that while Singapore welcomes foreign professionals, it will be carefully managed. “Because if it is not controlled, I think we will be easily swamped,” he said in the interview.

Over the years, the government has introduced a slew of measures or enhanced existing ones to address Singaporeans’ concerns over foreign manpower. These include tightening control over inflow of foreign workers, protecting citizens from unfair competition, and building up the local talent pool through training and international exposure.

But the at-times heated chatter over foreign talent and manpower simply refuses to go away — as can be seen from media reports, online discussions and parliamentary debates.

Political analyst from the Singapore Management University (SMU) Eugene Tan said: “The harsh reality about immigration is that once the immigration genie is out of the bottle, it will not be easy to put the genie back in the bottle.”

Over the years, the government has introduced a slew of measures or enhanced existing ones to address Singaporeans’ concerns over foreign manpower.

Why it matters

In recent years, the manpower and talent issue in Singapore has taken on an added urgency as the nation grapples with the double whammy of falling birth rates and a rapidly ageing population — which will add up to a drop in the number of working-age adults.

Singapore's total fertility rate, already dwindling since 2018, dipped to a historic low of 0.97 for 2023. The fertility rate needed for a generation to replace its preceding one is 2.1.

At the other end of the life spectrum, Singapore is on track to become a “super aged” society by 2026 — where 21 per cent of its local population is above the age of 65. By 2030, this number will grow to one in four.

In fact, efforts to tighten inflow of foreign manpower using levers like raising levies and tweaking local-foreign worker ratios for certain industries are constantly met by vocal concerns from businesses here.

At the national level, not having the foreign worker headcount would naturally lead to a smaller aggregate economic output for the country, all else being constant.

Singapore’s total population as of June 2023 was 5.92 million. Out of this, the non-resident population — which includes foreign workers, their dependents and international students — numbered 1.77 million.

Prior to 2011, the population growth of non-residents generally far outstripped that of residents — though this gap has since shrunk in recent years.

Song Seng Wun, an economic advisor at financial service provider CGS International, said that it is also worth noting that any cut in foreign talent would cause a “multiplier” effect too, as each worker is not only a producer in their own industry, but also a consumer.

He pointed to the Covid-19 pandemic as a real-life illustration of such an impact, where many foreign workers left the country due to border restrictions and many businesses came to a standstill.

“It won't be the exact scale, but it gives a flavour of what can happen,” he said.

On the less numerous yet still critical skilled foreign talent on the upper-end of the job ladder, experts said it is important to bring them in so that Singapore can tap new growth areas, for which the local talent pool has yet to have sufficient numbers for.

If Singapore were to lag behind or miss out entirely on opportunities arising from new and rapidly growing industries, the overall competitiveness and economic growth of the nation may be put at risk, said the experts.

Thus, the view among some that Singapore should hire foreigners only for jobs that are less desirable to its citizens — mostly the lower-skilled ones — and reserve the top-tier jobs for locals is problematic.

The big picture

An influx of foreigners prior to the 2011 general election is widely seen as a factor behind why the ruling People’s Action Party lost a Group Representation Constituency for the first time and secured its lowest vote share since the Republic’s independence — 60.1 per cent.

Numerous measures have been introduced or reinforced since then to address the dissatisfaction among locals.

These include those directly addressing the foreign labour market such as by tweaking the dependency ratio ceiling (the maximum ratio of foreign workers to the total workforce that a company in a given sector can employ) and raising foreign worker levy, as well as being more selective and transparent about the skilled workers brought in.

The Fair Consideration Framework — which ensures that firms try their best to hire Singaporeans first, before looking overseas — was introduced in 2009, and then strengthened in 2020 with tougher penalties.

Numerous measures were introduced or reinforced since the 2011 General Election to address issue of migrants’ influx.

Yet dissatisfaction still persists among some quarters here.

Some economists point to a sense of inequality perceived by locals. This is further exacerbated by the fact that in being selective of the foreign talent brought in, Singapore inevitably bring in the higher-earning ones.

Seeing foreigners able to better afford coveted things like cars and private homes, for example, would thus fuel a perception of inequality.

For this reason, the Government has also rolled measures outside of the labour market to address these concerns. These include beefing up public infrastructure capacity, as well as dampening a hot private housing market, and disincentivising foreign investment in the latter.

The boosting of public infrastructure is also necessary because Singapore faces a similar conundrum on foreign manpower at the other end of the scale, given that a large number of blue-collar migrant workers are needed to do the jobs that Singaporeans shun.

Observers noted the Government has also put forth a more nuanced messaging: While foreign manpower and talent are critical, Singapore residents are still prioritised.

SMU's Associate Professor Tan said that it is not easy for the Government to send a starker message that Singapore can't survive without foreign workers — a message Lee Kuan Yew had conveyed in the 1980s right through to the early 2000s.

“The political climate today makes it challenging to put forth the message that we need foreigners to augment the capacity and capability of our workforce in terms of both quantity and quality,” added Assoc Prof Tan.

When asked if there might be a downside to what could be deemed as a softer messaging, he agreed.

“An undue focus on what’s been done to ‘protect’ Singaporeans’ interests can easily become one of pressing the Government to adopt protectionist measures,” he said.

Dr Leong Chan-Hoong, a Senior Fellow for social cohesion research at the S. Rajaratnam School of International Studies, said that with much already done by the government, it is also important to encourage ground-up efforts to forge a “shared narrative” between locals and non-locals.

Through working on issues that both sides can empathise with, it can help strengthen the message that foreigners are here not just to take up jobs, but to contribute to Singapore’s success.

Bottomline

In trying to assuage Singaporeans' concerns, we must be careful not to take it to extremes, said business and sociology experts.

While communicating that Singaporeans are being prioritised is important, some experts opined that doubling down on it may have its downsides, such as sending a mixed message to would-be investors.

There have already been reports about expatriates and some companies leaving Singapore, or contemplating to, in recent years, amid rising rentals and costs.

This is further exacerbated by a more volatile global business landscape, characterised by more frequent disruptions.

In short, while Singapore has a lot going for it in terms of being an attractive place for businesses and investments, it cannot take for granted for foreigners will always want to come here to work.

Labour economist Walter Theseira said there is “a real risk” that some companies, if faced with shortages of talent or too many restrictions in bringing in manpower, will consider putting their investment elsewhere.

“So the question for Singapore must be, how many of these things will we have to say no to, or will say no to us, before we start to lose our competitive edge?” ― TODAY