Tighter controls on higher-skilled foreign workers will less likely prompt firms to hire locals than on lower-skilled workers: Tan See Leng

Tighter controls on higher-skilled foreign workers will less likely prompt firms to hire locals than on lower-skilled workers: Tan See Leng

Tighter controls on hiring lower-skilled foreign workers are more likely to prompt companies to recruit more locals, compared with tightening access to foreign workers who are higher-skilled, said Manpower Minister Tan See Leng on Monday.

This is because businesses were able to substitute lower-skilled but cheaper foreign workers with locals, and improve production processes accordingly, Dr Tan said in response to a parliamentary question raised by Workers’ Party Member of Parliament Leon Perera (Aljunied GRC).

Mr Perera asked the government about their efforts to study the effects of tightening foreign worker quotas and access to Employment Pass or S Pass holders.

Specifically, he asked whether the government has conducted any studies to determine the extent to which these measures would result in firms hiring more Singaporeans, firms hiring Singaporeans at higher pay, firms hiring more Singaporeans at higher pay, and business failures that would lead to net job destruction over the following year.

If the government has not conducted such a study, Mr Perera asked whether they would consider doing so and making the findings public.

Dr Tan explained that the finding is based on government impact assessment studies, which are carried out regularly on policies, including those related to the foreign workforce.

He added: “This has therefore informed our approach of remaining open to high quality foreign professionals, while maintaining a disciplined stance in regulating the number of work permit holders through quotas and levies.”

More than 1.5 million foreigners help Singapore plug the manpower gap to run its US$400 billion ($540 billion) economy. That is because its four million-strong resident population is a fraction of similar-sized economies in the region, such as Malaysia with 33 million and Vietnam with 99 million people.

“It is important that our policies enable firms to access foreign workers who complement the local workforce, so that the firms can grow and create more opportunities for locals,” Mr Tan said.

However, it is also important to note that these studies are just one input to the entire policymaking process and have their limitations.

“For example, they are unable to account for less quantifiable effects of having foreigners in our workforce, such as the knowledge spillovers to locals and other network effects.” The impact of the interventions studied might also change if they are applied beyond a certain scale or at a different time period, he added. “

As such, they need to be interpreted carefully alongside other sources of information, including more recent labour market statistics as well as industry feedback.”

He said proper calibration of the foreign manpower controls is necessary, as the tightening measures work only to a certain point before the outcomes turn negative.

“If you continue to tighten, it actually can have a worse-off effect for the development of our country in terms of the economic progress as well as industry developments,” he said.

Not enough skilled Singaporeans to fill vacancies?

Mr Perera commented, “That is an interesting finding for the other observation that the Minister made about this study is that for more highly skilled foreign professionals, that correlation doesn’t really apply so much as it does to the lower skilled workers.” He then asked, “Would the right conclusion to draw from that, be that we in Singapore are not producing enough highly skilled or qualified professionals to fill the job vacancies that the economy is creating?”

Dr Tan responded, “You cannot infer as a result of that that high skilled. We are therefore not doing enough to produce high caliber local Singapore talent.”

He added, “We are already doing significantly more to improve on the prospects in terms of moving them, in terms of investing in their training, in upskilling and upgrading. But again, because of the fact that there are all these accelerating changes, economies and industries are evolving very, very rapidly.”

“In terms of making sure that we are ahead of the competition, we will not just need to develop our own local talent, but we will also need foreign workers,” he added.

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