Here are 3 conditions for the government to loosen foreign workforce supply
It eyes productivity growth rate of 2-3%.
In his speech at the Committee of Supply, Mr Tan Chuan-Jin, Acting Minister for Manpower, said on Thursday that if the government is not able to meet its three targets, then it is likely to continue the tightening and restructuring approach on foreign manpower supply.
The government targets to have the foreign presence in the labour pool to be capped at around a third; to have productivity grow 2-3% a year; and to improve Singaporeans' wages.
Here's an excerpt from his speech:
First, we are watching very closely the growth rate of our foreign workforce. We want to slow the growth of the foreign workforce significantly during this decade, so that its proportion does not increase significantly beyond the one-third ratio that we adopted in 2010.
Last year, our foreign workforce grew by about 67,000 (excluding foreign domestic workers). This is still too large, and we have tightened our policies further to bring it down. We will be watching the numbers closely this year, sector by sector.
Second, we study the productivity growth of our overall economy, and also look at specific sectors to see how they are lagging behind international standards. As outlined in the report of the Economic Strategies Committee, we hope to achieve a productivity growth rate of about 2-3% per annum on average this decade.
We know it is not easy but it is something that we should strive and work towards. Clearly, we need to wean ourselves off this heavy reliance on manpower-driven growth and raise the quality profile of the foreign workforce.
Third, we continue to track the real wage growth of Singaporeans at all levels. This is something that all of us are concerned about and we should track this closely.
Our foreign workforce is meant to complement, not substitute, our local workforce. We are also mindful that while there are benefits that come with it, there are also disamenities.
We are mindful that the presence of a large pool of foreign workers who have lower reservation wages than locals could have a depressive effect on wages.
By keeping the labour market tight and raising the cost of hiring foreign workers, which is one approach, among several, to ensure wage growth of Singaporeans also improves over time.
If we are not able to meet these targets, we are likely to continue the tightening and restructuring approach.