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Foreign Labour in Singapore –Trends, Policies, Impacts and Challenges

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Presentation on theme: "Foreign Labour in Singapore –Trends, Policies, Impacts and Challenges"— Presentation transcript:

1 Foreign Labour in Singapore –Trends, Policies, Impacts and Challenges
Chia Siow Yue Singapore Institute of International Affairs PIDS Workshop Manila, January 2011

2 Data Sources and Methodology
There is very limited data on foreign labour in the public domain as the government regard such data as “sensitive”. Population censuses contain the main source of data on the foreign population census no longer shows population characteristics by residential status. Preliminary results of 2010 census shows only residents and exclude the large numbers of temporary contract workers who are unskilled/semi-skilled. Ministry of Manpower published labour force statistics cover only trend in aggregate foreign labour since 1991; sectoral distribution of foreign labour. No breakdowns by source country, occupation or gender. The MOM website has information on employment passes, work permits, dependency ceilings and other regulations on foreign labour. References to foreign labour, including statistics, from occasional Ministerial statements and media reports Given the severe data limitations, the study is mainly descriptive

3 Rationale of Policy Towards Foreign Labour
Singapore has a well articulated policy towards foreign labour. The objectives and factors are: Trend of declining fertility rate resulting in rapid population ageing and slowdown in the growth of domestic labour supply. Need to boost the size of population and labor force Economic restructuring to upgrade economy requires skilled labour force ---efforts at education and training have to be supplemented by inflows of foreign skills, professionals and entrepreneurs Labor market structural imbalances and business cycles – lead to considerable demand for foreign unskilled/semi-skilled workers Quantitative limit on foreign inflow necessitated by space constraints and need to maintain social cohesion

4 Demographic Change and Labour Supply-Demand Balance
Singapore’s macro need for foreign labour due to robust economic growth on the demand side and declining fertility rate on the supply side Measures to reduce demand for labour Upgrading economic structure away from labour intensive activities. Pressure businesses to adopt labour-saving methods and improve productivity performance Measures to increase supply of labour and skills Increase labour force participation of females and the old Expansion of formal education, particularly at tertiary levels Expansion of training facilities and programmes to upgrade those already in the labour market Inflow of foreign labour

5 Population and Labour Force Projections
Population (mill.) Labour Force (mill.) 1999 base 3.22 1.64 Projection 2009 3.69 1.99 Projection 2019 4.12 2.28 Projection 2029 4.46 2.37 Projection 2039 4.67 2.46

6 Singapore’s Resident & Non-resident Population
Million Annual growth % Total population, mid-2009 4.988 3.1 Residents 3.734 2.5 Citizens 3.201 1.1 Permanent residents 0.533 11.5 Non-residents 1.254 4.8

7 Singapore’s Resident & Non-resident Labour Force
2004 thousand 2006 thousand 2007 thousand 2008 thousand 2009 thousand %pa %pa %pa % pa Total labor force 2341.9 2594.1 2710.3 2939.9 3030.0 5.2 6.0 8.5 3.1 Resident labor force 1733.4 1880.8 1878.0 1928.3 1985.7 4.2 2.0 2.7 3.0 Non-resident labor force 608.5 713.2 832.4 1011.6 1044.3 8.3 16.7 21.5 3.2 % non-resident 26.0 27.5 30.7 34.4 34.5

8 Characteristics of Foreign Labour …1
Country sources: No data available. Policy objective --- permanent inflows should not upset the existing ethnic balance; temporary contract labour inflows should not upset social cohesion Professionals and skilled labour from broad spectrum of countries including Europe, North America, Australia-New Zealand, Malaysia ---many linked to employment in MNCs Policy prescribed unskilled/semi-skilled workers from Malaysia, non-traditional sources (Indonesia, Philippines, Thailand, Myanmar), North Asia (China, Hong Kong, Taiwan, Korea), South Asia (Bangladesh, Sri Lanka, India) Skills distribution: No data available. But bulk of foreign labour are unskilled/ semi-skilled workers on work permits. Work permit holders are further subdivided into unskilled and semi-skilled. Differentiated worker levies encourage inflow of more skilled labour Gender and age characteristics: No data available. Construction workers are males, FDWs are females, healthcare workers are primarily females. Upper age limit of 58 years imposed on work permit holders. Lower age limit of 23 years imposed on FDWs.

9 Sectoral Distribution of Foreign Labour, 2008
No. in thousands % distribu- tion % of total labor in sector Manufacturing 274.4 24.9 46.8 Construction 254.5 23.1 70.7 Community & personal services 198.3 18.0 33.6 Trade 131.8 12.0 32.8 Hotels & restaurants 59.0 5.4 33.0 Professional services 35.0 Administrative & support services 50.2 4.6 37.2 Financial services 37.0 3.4 23.0 Real estate & leasing services 25.4 2.3 37.1 Transport & storage 15.3 1.4 7.7 Others Total 1100.4 100.0 37.3

10 Foreign Labour Management Policies
Policies divided into 3 periods From 1970s – severe labour shortage, large inflows from Malaysia and extended to non-traditional sources, work permits and worker levies introduced, inflows of FDWs allowed From early 1980s attempt to limit inflows failed. Comprehensive levy system and dependency ceilings implemented From 1990s booms and recessions saw policy relaxation and tightening respectively Policies divided into 3 categories of foreign labour ---professionals and skilled workers; unskilled and semi-skilled workers; illegal and irregular workers Quantitative, price and education/skill control instruments –work permits and employment passes; dependency ceilings; worker levies; skills and educational requirements Policies divided into 3 categories of foreign labor ---professionals and skilled workers; unskilled and semi-skilled workers; illegal and irregular workers

11 Management of Foreign Skilled/Professionals
Open door policy because of shortage of skills in relation to requirements of MNCs and building a knowledge-based economy Active recruitment of “foreign talent” through overseas missions, websites and specialised agencies, fellowships and scholarships Types of employment passes catering to different skill types –P1 and P2, Q1, PEP, S passes Cover mainly PMETs (professional, managerial, executive, technical) Acceptable educational and training qualifications and work experience No quantitative limits imposed except for S Pass Salary differentiation for different types of passes, ranging from more than S$7000 to not less than S$1800 pm Contracts of 1-5 years, renewable Allowed to bring in family and dependents Offer of permanent residence (PR status) and citizenship --citizenship eligibility after 2-6 as PRs; No dual citizenship allowed

12 Management of Unskilled/Semi-Skilled
Strict controls over inflows of unskilled/semi-skilled labour exercised through use of work permits, worker levies, dependency ceilings and skills qualifications and age restrictions Employment of Foreign Workers Act specifies responsibilities and obligations of employers Work permit ---to control the numbers of unskilled/semi-skilled in Singapore For those earning not more than $1800 pm; R1 pass for semi-skilled, R2 pass for unskilled Tied to specific employer, renewable 2-year permits Not allowed to bring family Worker levy --- to narrow the gap between reservation wage of local workers and wage demands of foreign workers. Amount of levy has been fine-tuned over time to meet change market demand conditions. Can range between S$ pm depending on sector, skills and dependency ratios

13 Management of Irregular/Illegal Foreign Labour
Strict controls and relatively successful implementation due to Concerns over national security and public safety, human trafficking, and social disorders. Information and education of the Singapore public of the risks of employing and harbouring irregular and illegal migrants. Well patrolled borders, small land area and relative absence of rural informal sectors in which irregular/illegal migrants can seek refuge Transparent and efficient implementation of immigration laws and regulations and work permit requirements and processes. Strict and efficient law enforce and relatively lack of corruption in enforcement agencies and judiciary Severe penalties for law breakers (fines and imprisonment, not only for the errant foreign workers but also errant employers, errant landlords and all those who harbour the illegular/illegal workers. Singapore’s strict enforcement sometimes lead to tensions and conflicts with neighbouring countries. Need more bilateral cooperation to handle problem.

14 Economic and Non-Economic Impacts…1
Different effects of skilled/professionals, unskilled/semi-skilled and irregulars/illegals Economic effects Macro-effects on economy and micro-effects on employers, local labour and households Positive effects of relaxing the labor and skills constraints on economic growth; largely complementary role of foreign and local labour Ready supply of unskilled/semi-skilled have negative effects on macro economic restructuring and micro effects on businesses adopting labour saving options. Negative impact on productivity growth Positive effect of cyclical buffer Depressed wage levels of the unskilled/semi-skilled local workers Availability of FDWs enable more women with children and elderly to enter the labour force

15 Economic and Non-Economic Impacts …2
Broader impacts of a sizeable foreign worker presence, including illegals Threat to national security and increased incidence of crime and disease Negative impact on social cohesion and positive impact of social-cultural diversity and dynamism Growing space constraints, with crowding-out effects on public spaces, recreational facilities, public housing, public transportation, subsidised education and subsidised healthcare services The sharp increase in the foreign population and workforce in , coupled with the severe recession and rising unemployment in 2009 heightened public concerns over economic and social costs. The growing social discontent led the government to announce policies to tighten inflows and widen the perceived benefits between citizens and non-citizens

16 Welfare and Protection of Foreign Workers…1
All workers (except household maids) are covered by the Employment Act which specifies working hours, rest days and paid holiday leave, and the Workmen ‘s Compensation Act which provides compensation for workplace injuries and occupational illnesses. There is no minimum wage legislation in Singapore as the government believes wages should be market-determined. The Employment of Foreign Workers Act covers the terms and conditions of issue of work permits, the responsibilities of employers and work permit holders, and the penalties of infringement. The Employment Agencies Act spells out the registration requirements for bona-fide recruitment and placement agencies for FDWs and the fees and costs they can charge employers and FDWs. This is to obviate exploitation of FDWs while in Singapore.

17 Welfare and Protection of Foreign Workers…2
Critics of Singapore foreign worker policies point to: Recruiting of foreign talents lead to brain drain in other countries: However, source countries can undertake measures to retain their own brains such as improving their employment conditions, taxing those brains that emigrated, and using the remittances for HRD. Singapore can also offer financial and technical assistance for HRD in source countries. Using foreign labour as cyclical buffer places the burden of adjustment in recessions to the source countries: However, in the 2009 recession, Singapore government and trade union leaders exhorted employers to minimise retrenchment, and use alternatives of lower wages and sending workers for government-subsidised training during this slack period. Bilateral cooperation between receiving and source countries can help minimise the cyclical effects. Exploitation of foreign workers by recruiting and placement agencies: Singapore has enacted the Employment Agencies Act but bilateral cooperation is needed to ensure that such exploitation is minimised at source.

18 Welfare and Protection of Foreign Workers…3
Exclusion of FDWs from the hours of work, rest days and compensation for work-related injuries and illnesses in he Employment of Foreign Workers Act and the Workmen’s Compensation Act and to their physical abuse at the workplace: The government argued that it is unable to legislate hours of work and rest days for FDWs because of the nature of their work and workplace. Employers of FDWs have to undergo “orientation programmes” on their responsibilities and obligations. Errant employers are severely punished by the courts to shame them and act as a deterrent to others. New FDWs, who are mainly from rural backgrounds, have to undergo training on safe work practices in high rise apartments and some basic skill training on working for urban households to minimise work conflicts with their employers Psychological problems have sometimes led to suicides and violence against employers’ household members. The government has raised the working age of FDWs to 23 years and require 8 years of education and some English speaking proficiency to minimise communication and psychological problems. NGOs and church groups organise social activities for FDWs and provide support in times of need.


20 Conclusion Singapore is trying to reduce its longer-term dependence on foreign labour through: Accelerated economic restructuring to raise productivity performance and reduce the dependence on unskilled/semi-skilled labour Accelerated education and training to increase the local pool of skilled and professionals Re-designed low-paying manual jobs to improve their productivity, ability to pay higher wages, and make them less “3D” to local workers. Low wage earners also receive income supplements under the Work Improvement Scheme Businesses and households are incentivised to be law-abiding and better employers through greater enforcement of penalties under existing legislations and through public education. Regional cooperation (under ASEAN) and bilateral cooperation between source and receiving countries will ensure that labour migration is a win-win solution

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