Current labour policies put Singapore at risk

by Miklos Bolza07 Jan 2016
Challenges such as a rapidly ageing workforce, stricter manpower curbs and close to zero productivity growth are putting Singapore at risk of losing its global competitiveness, says the Singapore Business Federation (SBF).
 
In a new report, Position Paper for a Vibrant Singapore, the SBF has called upon the government to assist businesses with these labour issues through a number of proposed initiatives.
 
Tackling critical business matters
 
According to the National Business Survey conducted by the SBF, one of the top two concerns for local businesses is manpower. Not only have manpower costs increased faster than productivity growth, but the national labour market remains tight with low unemployment rates.
 
Pressure on businesses has been made worse by changes in foreign worker policy, the SBF adds.
 
The paper recommends the government works together with the SBF and the Trade Associations & Chambers (TACs) to:
  • Clearly define what it means to be ‘manpower lean’
  • Refine foreign manpower policies in different sectors
“We are being squeezed at both ends of the labour market,” the SBF says.
 
“At the lower end of the skills spectrum, Singaporeans shun jobs in certain industries. At the higher end, our workers lack the expertise required in highly specialised areas.”
 
These gaps, if left unaddressed, will mean Singapore companies eventually lose their competitive edge, the SBF warns.
 
A shift from broad labour policies
 
The paper makes several recommendations for manpower policies specific to various industries or groups. For instance, sectoral flexibility will bring in larger foreign quotas for industries where locals are yet to build up the necessary skills or simply do not wish to work.
 
“This is while our locals skill up and/or the respective industries work to make the jobs more attractive through various means.”
 
The SBF also suggests the government introduces more enterprise flexibility with their labour policies. They recommend the expansion of the Lean Enterprise Development (LED) Scheme to provide foreign worker policy treatment that varies depending on the company.
 
This could bring in more foreign workers in transitional roles to businesses which commit to the training of local workers and/or job redesign following the government’s objectives. The scheme could also assist firms unable to source local workers with the appropriate skills.
 
The LED Scheme could also be expanded by providing additional rebates to companies which successfully reduce their foreign worker dependency.
 
Finally, the SBF suggests the scheme could be expanded beyond SMEs and onto larger organisations struggling with the current labour conditions.
 
Reviewing the levy system
 
The final immediate-term recommendation from the SBF is that the government reviews its foreign worker levy system.
 
“Businesses question the need for foreign worker levies … to regulate the number of foreign workers in Singapore when a more fundamental policy on the maximum number of foreign workers allowed here has already been established.”
 
To rectify this problem, the government should recalibrate the levies, the paper says. By considering the coming year’s net inflow of foreign workers, the rising cost of business caused by the levies could be subdued.
 
For instance, the levy for S Passes can be easily removed since the government already has qualification salary and quota restrictions in place for all S Pass applications.
 
The levies for higher skills foreign workers can also be reduced, the SBF says, so that businesses are encouraged to hire within this group.
 
Related stories:
 
Foreign worker levy to be “looked into”, says MOM
 
Foreign worker levies – ‘It’s like a cumbersome tax’
 
Foreign workforce curbs “here to stay”, experts say

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