Foreign workers and the PAP strawman

Ho Yixian

On April 21, the front page of the Straits Times featured PM Lee speaking at the official opening of a US$3 billion electronics plant, where he proudly proclaimed:

"Without the foreign workers, we would not have attracted this US$3 billion investment, and Intel and Micron would have built its wafer fab elsewhere."

This bold assertion naturally received maximum coverage by our national newspaper with minimum thought or additional research. Nowhere did the reporters reveal any interest in capturing the thoughts of other relevant parties. No attempt was made to interview the senior management of the plant or workers on the ground to explore the nuances of the issue. What were their top priorities when determining the location of the plant? Did they also consider Singapore's efficient transport and telecommunications infrastructure, well educated workforce, and low corporate tax rates? More importantly, would they have chosen Singapore had they been allowed to hire only 3 in 10, or even 2 in 10 foreign workers, instead of the 4 in 10 they eventually settled for? Our Straits Times correspondents abdicated their responsibilities as reporters and chose instead to be stenographers for the Prime Minister.

And if these reporters had bothered to ask the pertinent questions, they might have stumbled onto the true crux of the foreign worker issue. The PM and other members of the PAP have repeatedly tried to frame the foreign worker debate in this election as a question of 'Have the total benefits of having foreign workers in Singapore outweighed the costs?', while asserting that preventing foreign workers from working in Singapore would lead many MNCs to pull out of Singapore. At best, the PAP is employing an indefensible strawman to hit like a pinata at a party. At worst, the PAP is failing to comprehend a basic concept every A level economics student learns.

No serious opposition party is advocating shutting out all foreign workers completely; most argue that over the past 5 years, too many have been let into Singapore too quickly. It is not about total benefits versus total costs. It is about marginal benefits versus marginal costs. The first foreign worker let into Singapore, for the sake of argument the CEO of a local HQ, probably created many jobs and didn't take up much space on our roads and trains. The next few hundred thousand maybe added to our talent pool or did jobs Singaporeans loathed to do. The millionth, however, has in all likelihood created minimum benefits for Singaporeans, and is that person taking up the last space on the MRT at rush hour.

The fact that all the foreign workers in Singapore have in aggregate brought more good than harm does nothing to prove that the PAP has allowed the optimum number into Singapore. And while it may be true that MNCs like Intel would not locate their plants here if they were not allowed to hire foreign workers, that is far from the issue. The issue is whether they would have located their plants in Singapore had they been allowed to hire fewer foreign workers. That is what the PAP has glossed over by making sweeping statements that mis-characterise the complaint of many Singaporeans.

Case in point - the much vaunted Integrated Resorts, those supposed creators or 35,000 jobs. Once again PM Lee pulled out his trusty strawman and claimed that "(the IRs) would not have decided to invest here had we required them to recruit only Singaporeans.”  We already know this is the wrong question - the right question is whether they would have decided to invest here had we required them to recruit more Singaporeans. The common refrain is that even if the government had legislated for fewer foreign workers, there were not enough Singaporeans willing to take up jobs in the IRs. This argument is once again wide off the mark. The truth? There were not enough Singaporeans willing to take up jobs in the IRs at the wages they were offering. And make no mistake - the IRs can afford to pay higher wages. Helped no doubt by the artificially depressed wages they have had to pay their employees, in the last quarter "Marina Bay Sands generated the highest quarterly adjusted property EBITDA and EBITDA margin from any single property in the history of (Las Vegas Sands)."

Another favourite assertion by the PAP is that "we can certainly stop foreign workers from coming to Singapore, but we cannot stop companies from leaving." In the PAP's telling, Singaporeans will compete with foreign workers to supply the global demand for labour regardless of whether these workers reside in Singapore. They forget that it is not the foreign worker that competes against the Singaporean worker, but the foreign worker and his foreign infrastructure that competes against the Singaporean worker and Singapore's infrastructure. And while the latter could be a level playing field, the Singaporean is put at a disadvantage as soon as the foreign worker with lower wage expectations is brought into Singapore to immediately enjoy the benefits of the infrastructure built with taxes previously levied on Singaporeans.

So while it may be true that Singaporeans already compete with foreign labour to a certain extent, it is a gross exaggeration to assert that all MNCs in Singapore are going to leave for foreign shores simply because of cheaper labour elsewhere. To give credit where it is due, the PAP over the past 52 years has ensured that Singapore has a multitude of infrastructural and administrative advantages besides cheap labour.

So yes, if absolutely no foreign workers were allowed into Singapore we might not be able to attract the likes of Intel, and MNCs might leave Singapore in droves. But we must recognise this as election rhetoric - an oversimplication of a nuanced issue for the sake of deflecting criticisms that the PAP has let in too many foreigners too quickly. We must not behave like dumb crows or Straits Times reporters and flee in fear at the first sight of the PAP's strawman.