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Singapore’s Foreign Labour Problems

 2 min read / 

Singapore has experienced an enormous expansion since its expulsion from Malaysia, becoming a city-state power with a GDP per Capita measured at Purchasing Power Parity of $76,237 in 2013, higher than many other major economies like USA ($51,450) and UK ($35,013).
In order to do so, Singapore has relied a lot on the foreign work force, which now accounts roughly for two fifths of the total and is the main reason of the increase in population of the last decade. Government has been tightening rules for hiring cheap foreign workers since 2010 due to an increased xenophobia and complaints of local population, together with the realization of the unsustainable population growth and signs of a slower economy.

“If all we become is a hotel for foreign businesses, we are dead in the long run”

Koh Boon Hwee, Businessman

Moreover, the ease for quick-start environment and low corporate tax rates have been a fertile field for multinational corporations that contributed in the outstanding growth but created a warning for Singapore’s effective capacity of creating its own domestic firms, besides the presence of successful companies such as Singapore Airlines and Singtel.

2015 budget announced in February by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam shifts the aim of decreasing the foreign labor force with the increase of productivity growth to counter the recent effects of Singapore’s slower economy. High-income earners as heavier taxes will be enforced for Singapore’s top 5 per cent, while start-ups and businesses in expansion mode will have at their disposal $1bn for R&D from the National Research Fund during the year.

The job market is now around 40 per cent tighter than it was five years ago, but truth is that the foreign manpower in Singapore has continued to grow, just at a slower rate. A final concern is that the sectors are suffering from low productivity levels are also those most heavily reliant on foreign workforce and the most reluctant to change. Addressing productivity gain and foreign workforce cuts are not a mutually exclusive choice as the former might be pursued through the latter.

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