The labour force game

By GS

At the PAP rally at Bedok Stadium on Thursday (4 Sep), Manpower Minister Lim Swee Say espoused the good work of the (PAP) government in tightening the labour market. He noted that much effort has gone into ensuring Singaporeans are taken care of, pointing out that the growth of skilled foreign workers (i.e. Employment Pass and S-Pass level recruitment) has dipped starkly – by a total of some 70% – in contrast to the job creation for Singaporeans.  The numbers quoted in his speech have been put in Table 1.

Labour - Table 1
Table 1: Numbers of employment pass and S-pass granted (Source: Lim Swee Say)

The employment pass is typically given to degree holders from other countries who are hired for  executive jobs that Singaporeans  would be more than happy to have – provided they are paid an appropriate living wage. While that near 97% drop in the number of EPs issued looks impressive, the question really is whether there was a need to have issued so many in the first place.

This effort by the government appears to be nothing more than a reversal of an ill-conceived policy that perhaps favoured MNCs a bit too much.

labour - fig A
Figure A: Employment change by residential status (Source: MOM)

Lim Swee Say also suggested that the low manpower growth policy shift occurred back in 2010 and had nothing to do with the stronger opposition presence in Parliament after GE2011. However, as Figure A shows, the high manpower growth continued into 2011 before it began paring down steadily between 2012 and 2014. While the figures show that the actual shift in real numbers occurred after GE2011, it is also possible that the implementation was earlier and the real impact was felt later, so there might be some truth to his assertion.

Unfortunately, the average annual growth of the foreign labour force has been outpacing the residential labour force over the last 10 years and it remains to be seen how the government can maintain the ratio of resident workforce to foreign workforce at 2:1 – which means they actually have to correct the current ratio of 1.6:1 (based on the data in Figure B).

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Figure B: Labour force composition – 2004, 2009 & 2014 (Source: MOM)

Perhaps the scarier issue is that according to the MOM’s findings (see excerpt in Figure C), their conclusion is that overall labour force growth will slow down significantly by the end of the decade. Therefore, it is not unrealistic to interpret this to mean that the current tightening of foreign labour influx might be just a short term solution for the next few years, before the ‘unsustainable slow growth’ is used as a reason to open up the landscape to more foreign labour. Clearer indication as to the government’s plan for the labour force direction for the next five to 10 years is therefore necessary at this point in order for the citizens of Singapore to better weigh their future.

labour - fig C
Figure C: Conclusion to the Overview entitled ‘Examining the Expected Slowdown in Local Employment Growth’ (Source: MOM)

As far as the data from MOM shows, it seems the government is with you for now but considering that it is typically for Singapore as an economy, it is rather vague if it will be for you in the long term.