Tighter foreign worker policies “threatening the survivability” of Singapore firms

by Hannah Norton15 Jun 2015
A few small changes to Singapore’s foreign worker policy could help companies struggling to find staff in today’s tight labour market, an economist says.

In a research report issued last week, Singapore-based economist Kit Wei Zheng said that adjusting quotas to allow employers in certain sectors to hire more foreign workers would help the employers increase demand and revenue, as well as potentially increase labour productivity in the long run.

Kit said that such adjustments would be a more “direct and efficient" way to control foreign workforce growth, compared to raising levies.

The foreign worker levy deferment announced in Budget 2015 was in recognition of the fact that "tighter foreign worker policies may be threatening the survivability” of firms, Kit said.

Singapore’s foreign worker levy regulates the number of foreign workers in the island nation, and starts on the day the Temporary Work Permit or Work Permit is issued and ends when the permit is cancelled or expires.

Another technique to curtail the growth of foreign labour has been the introduction of the Fair Consideration Framework guidelines.

Introduced in August last year, the guidelines require employers to first advertise job vacancies on the national Job Bank for at least two weeks before submitting Employment Pass applications.

The advertisement must be open to Singaporeans and must comply with the Tripartite Guidelines on Fair Employment Practices. Employment law specialist and Clyde & Co legal director Julia Yeo said that one example would be ensuring hiring practices are non-discriminatory.

“We find that the Ministry of Manpower recently is becoming more vigilant in investigating companies that may have flouted the Tripartite Guidelines,” she told HRD Singapore.

But taking such a hard-line on the hiring of foreign labour might not be the best for Singapore’s economy, Kit said.

He believes there may be scope for a re-allocation of foreign workers to sectors that have a greater need for them, such as service firms.

“With the completion of several major construction projects and a cyclical slowdown in the property sector, a re-allocation of construction foreign worker quotas to the labour-starved service sector, especially in food and beverage, could help service firms meet still-robust demand, increase revenues, and possibly service productivity; while not necessarily hurting construction productivity."

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