- How do you think recent moves to tighten the foreign workforce will affect our labour market?
As foreign manpower is tightened, over time you'll get higher demand than supply. Already, unemployment levels are at their lowest, so in this situation, say if the criteria for Q1 workers are tightened, then wages in this segment will rise.
When organisations hire people, they look at the competencies and skills needed and they want the best person for the job, and they are willing to pay a premium for the right person.
As wages increase, prices will increase because people can afford to pay more so sellers will naturally want to increase prices; also, with wages increasing across the board, costs will go up and these costs will be passed on to the consumer.
You may find your $2 plate of chicken rice rising to $5 or even $10 as people in the whole supply chain earn higher wages and the costs of doing business rise.
- Would this have an impact on our competitiveness?
Yes, companies here don't only compete in Singapore, they compete regionally and internationally. It's important that we're still a meritocracy, to ensure that there isn't any discrimination. But we need to get the balance right.
Singapore in the past decade has done a remarkable job establishing itself as a destination for talent and an attractive place to live.
Looking ahead, the economic dynamic is changing, you can look around the region and there are countries like China and Malaysia offering incentives to attract talent, such as tax benefits, or investing heavily in infrastructure and public services to raise the quality of life to attract people to relocate there.
Everyone is engaging in this war for talent. The world is a much more globalised place and will continue to be, especially with emerging regions like Latin America and the Middle East.
These days, talent is mobile at all levels, it wasn't like that 20 years ago. The ability to get talent is a key aspect of a country's competitiveness.
- What do you think about this move to review the employment framework and adapt from other countries?
Some countries, like the United States, make it hard for companies to hire foreign talent. The H1B visa (non-immigrant work visa), for example, is very hard to get. Some analysts will tell you that the US is not as competitive as it used to be; it used to attract the best brains.
Now if companies can't get the talent they need, they'll just set up somewhere else. So there has to be a balance.
Singapore is trying to achieve this and there's no one-sizefits-all approach. I believe there'll be room for the right talent here, wherever they may be from.
My own observation is that there's a correlation between the degree of protectionism in a country and how unwell their economies are, when you compare countries like Britain with others which are open, expanding and growing, such as Brazil and India.
The other thing (about) the labour market in the US and other developed countries is that the stage of economic development is very different from Asia, where the pace of growth is much faster.
While Singapore might have a relatively lower growth rate, we are surrounded by countries and cities that are growing rapidly. So we can't afford to be protectionist.
The balance is a difficult one. While we need to make sure that in the long term, Singaporeans are getting the opportunities, development and wage levels they need, we also need to be mindful of the context that we operate in.
The trick is really how do we build a workforce that is flexible and adaptable.
The reason PMET unemployment in the older age groups is higher is that many of these workers might not have been able to adapt to changes over time. But if they can, they'll always be able to move and change.
- What other challenges do you foresee in this move to reduce our foreign workforce growth?
One problem many employers face is the difficulty of getting Singaporeans to take on certain jobs perceived to be low-end.
We have evolved to a stage where we prize certain types of degrees and jobs over others.
It becomes a "desirability of job" issue, where parents influence their children over what is an acceptable job.
In developed economies where wages at lower-end jobs are higher, you notice that being a tradesman or going on the vocational path is not seen as inferior, unlike here.
So it's a perception issue, on what's an honourable career, and this may need to change as our manpower needs evolve.
- Are companies here worried about further tightening?
I think the majority are positive about Singapore, that it will get the balance right. There are a few which may be worried as they have set up their research centres and headquarters here on the basis of the availability of talent. That's what companies are competing for globally right now. What companies don't have enough of, is the right people.
- How will these businesses cope with the wider restructuring effort and reduced foreign workforce?
The focus will have to be on productivity. Wages cannot go up unless this comes with some productivity gains, so it will be how to generate more revenue with fewer people.
This means redesigning work processes. For example, if you have a food and beverage outlet, you might need customers to fill out their orders instead of having wait staff take them.
Inevitably, it will come down to getting consumers to do more. I think companies will figure it out. They are willing to make the adjustments but many worry that the customers will not adapt. They will need time during this transition.
So we will see a lot more businesses requiring self-service on the part of the consumer, or the consumer must pay a premium for a higher level of service.