Foreign companies complaining about purported lack of skilled workers in Singapore — what happened to the skills transfer envisioned by Goh Keng Swee?

A recent survey by the British Chamber of Commerce (BritCham) revealed that British companies are reluctant to hire Singaporeans and permanent residents (PRs) due to their lack of technical skills.

The other two obstacles that the survey highlighted were salary expectation (38 percent) and the availability of soft skills (35 percent).

If that’s not bad enough, the poll released on Wednesday (11 November) found out that about a quarter, or 26 percent, of respondents noted that senior management roles were the most difficult positions to be filled by Singaporean and PR candidate in the past 12 months.

Other positions that were hard to fill with local workforce include roles in business development (17 percent) followed by IT as well as marketing and communications (12 percent).

Although British firms are pointing to the lack of skilled workers in the local workforce as one of the biggest obstacles they face in the country, this should not been the case – especially after the Economic Development Board (EDB) Bill was enacted in 1961.

The timeline of EDB

The EDB was established on 1 August 1961 to lead Singapore’s industrialisation programme. When People’s Action Party (PAP) formed the new government of Singapore in 1959, the country was plagued with socio-political and economic problems, which is why economic development was the government’s top priority.

If that’s not all, high unemployment was another major concern faced by the government then. To curb these issues, the late Goh Keng Swee — then-Minister for Finance — tabled the EDB Bill at the Legislative Assembly, and it was passed on 24 May 1961.

There were four divisions within the EDB: Investment Promotion Division to attract foreign and local entrepreneurs, Finance Division to manage financial activities such as investments and lending, Projects Division and its Technical Consultant Service to evaluate the technical and economic feasibility of projects, and Industrial Facilities Division to ensure adequate provision of industrial land.

Over the decades, the EDB went through multiple organisational changes, moving from the “traditional administration of various ordinances and acts, investment promotion and industrial and manpower planning to more dynamic and imaginative investment promotion in both manufacturing and services supported by ancillary manpower, supporting services and marketing development”, as highlighted in a research paper by academician Linda Low.

However, by the late 1960s, the city-state faced other new challenges like a tight labour market and rising wages. As such, the EDB shifted its focus from labour-intensive industries to training the workforce for capital-intensive and higher-technology industries.

In the 1970s, in order to meet the skills required for the upgraded industries, the EDB initiated overseas industrial training programmes, joint government-industry training centres and local industrial training grants. This allowed companies to train and upgrade the skills of their local staff.

Realising the importance of manpower in a knowledge-based economy, the EDB went all out to attract talent from different parts of the world to “augment” the local skill pool so Singapore would become a hub of skilled workers.

Goal shifted

Although the initial goal of EDB to bring in foreign talent was to help the local skill pool and transfer the skills to them, that goal didn’t quite follow through.

Over the years, the number of foreign workers grew drastically in the country making it difficult for Singaporeans to secure employment due to rising competition.

In fact, according to the Ministry of Manpower (MOM) statistics, foreign worker numbers reached an all-time high in 2016 with approximately 1.4 million foreign employees compared the country’s 5.62 million population at the time.

With the increase of cheap labour flooding the market, companies became reluctant to hire local skilled workers as they were too “expensive”, resulting in them being left out in place of trained personnel.

On the other hand, expats were also allowed to take up jobs – especially professional, manager, executive and manager (PMET) roles – even if locals are willing to be hired in these positions. As such, this resulted in stiff competition among the locals and the unemployment rate grew exponentially.

In fact, MOM’s statistics noted that the unemployment rate for citizens stood at 3.3 percent in June 2019, compared to 3.2 percent in the first three months of the year. In 2018, the figure was at 3.0 percent. This clearly shows a worrying upward trend.

Former GIC Chief Economist Yeoh Lam Keong told TOC that the massive influx of unskilled and semi-skilled workers happened in the 1990s and between 2000-2010 in the form of Employment Pass and S Pass workers.

He said that the number reached around 1.2 million in the last two decades. To make it worse, salaries in unskilled and semi-skilled vocations stayed stagnant or even fell over long periods.

“This discouraged the upgrading to higher value added skills intensive industries and the training of skilled tradesmen or technicians among the local labour force as wages were too low to invest in such training,” Mr Yeoh said.

He added, “Thus when the older pool of skilled workers retired (eg: the construction craftsmen), there was no local inflow to replace them”.

“This was so even for local engineers facing competition from cheaper regional engineer imported labour. As a result, we have an inadequate supply of well-trained local engineers”.

Echoing the same sentiment, award-winning speaker and strategy consultant Liu Fook Thim said in a forum by The Straits Times (ST) that many Singaporeans are no longer finding engineering as an attractive career option.

He said there are number of reasons for it including the lack of restriction to practice in Singapore as well as low pay.

“Unlike the medical and law fraternities who restrict foreigners from practising in Singapore, there is no such restriction for engineers.

“As a result, local engineers who go through years of Singapore’s world-class education system and graduate from Nanyang Technological University, one of the top engineering universities in Asia, struggle to find jobs while employers prefer to hire an engineering graduate from a foreign university,” Mr Liu said.

Additionally, the increase of foreign engineers also caused the wages for engineers be reduced as foreign engineers are willing to accept lower pay.

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