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Oral reply to PQ on economic strategy

Oral reply to PQ on economic strategy

Question

Mr Liang Eng Hwa
: To ask the Minister for Trade and Industry what is the strategy for growing our economy and creating good jobs for Singaporeans without an over-reliance on foreign manpower.

Oral Answer by Minister for Trade & Industry Mr Chan Chun Sing

1. Mr Speaker Sir, we strive for economic growth to achieve three objectives:

to give our people better jobs and better lives;
to provide our people the opportunities to fulfil their potential and aspirations; and
to grow Singapore’s economic strength for strategic relevance in the world.

2. Our economic strategies are developed to improve the quality of life and livelihoods for Singaporeans. Quality jobs provide good wages, and good wages and opportunities enable Singaporeans to pursue our dreams.

3. Quality jobs come from quality investments – local and foreign. The competition for quality investments has never been easy. Without natural resources, we strive hard to create our own competitive advantages and build up a strong reputation and trusted brand name for Singapore based on the following:

political stability
rule of law
a progressive business environment
cohesive tripartite relations
skilled workers
physical and non-physical connectivity of air, land, sea, data, finance, talent, technologies and regulations
intellectual property protection
consistency of policy execution over the long term

4. However, the size and quality of our talent pool still matters. Size confers certain economies of scale. Too small a talent pool and our enterprises will find it hard to compete with the big global players. An inability to scale or transcend our geographical size and location will hinder our overall competitiveness.

5. The quality of our talent pool is equally important. It allows us to overcome limitations of size to attract high quality and high-value add investments. Talent is an even more critical success factor for our new growth sectors such as Infocommunications & Technology, Finance and Advanced Manufacturing, which compete on ideas, knowledge and skills.

6. Talent is thus critical to ensure that we are able to win the quality investments, not only for this generation but also for future generations. On the other hand, the loss of a quality investment means more than the loss of competitiveness and good job opportunities for this generation of Singaporeans.

7. It also means the loss of competitiveness and good job opportunities for future generations, where we run the risk that our children and grandchildren will end up having to seek better job opportunities elsewhere because these high and higher-paying jobs are no longer available in Singapore.

8. Hence, to allow our people and enterprises to punch above our weight, we need a certain local-foreign complement, both in terms of quantity and quality.

9. Mr Deputy Speaker Sir, with your permission, may I illustrate with a simple model using the slides on the LED screen, how we create good jobs for Singaporeans with a foreign workforce complement but without overly relying on foreign manpower.

10. The red bricks we see in figure 1 represent the Singaporean workforce. If we only have the Singaporean workforce, the size of our economy will only be so big and the wages of our people only so high as in figure 1. That is the baseline case.

11. If we bring in some foreign manpower to complement our local workforce, we can grow the overall size of the economy and more importantly, allow our people to take on higher wage jobs that commensurate with their education and aspirations. The complement is in yellow.

12. However, even at this stage, there will still be many Singaporeans with the talent and aspirations to achieve even better prospects, higher wages either in Singapore or elsewhere in the world.

13. To achieve that, we need higher quality investments that can create even higher paying jobs. This will often require us to bring in some foreign workers, at different skill levels, to complement our local workforce to win the next slate of high-quality investments that can provide more high-paying jobs for Singaporeans, as in figure 3. Otherwise, our globally mobile and competitive Singaporeans will leave for greener pastures elsewhere.

14. We may ask why do we not have all the Singaporeans doing the highest paying jobs immediately? This was where I left off in the last Parliament session where I explained the dilemma and the trade-off and asked if we would take a new investment that provides many good jobs for Singaporeans, but some of the higher paying jobs in the company are initially filled by foreigners as shown in the diagram in figure 3. At the first step we did not have all Singaporeans taking all the higher-paying jobs.

15. Do we want such an investment in Singapore or should we turn it down and let the company invest in another country? If we turn it down, we immediately lose the large number of good jobs that Singaporeans can have brought about by this investment. We also lose the opportunity for Singaporeans to take on the higher level positions over time, as these jobs are no longer in Singapore.

16. Our strategy is to win the investment first and work hard to quickly upgrade the skills of our workers to take on those higher paying jobs as soon as possible. So our strategy is to win the investment first, not just for this generation, but for the next. Work hard to quickly upgrade the skills of our workers, to take on these higher-paying jobs as soon as possible. Progressively, our workers will have opportunities to take on those jobs and certainly the next generation who are better educated will have better opportunities as shown in figure 4.

17. Over time, more and more of the lower wage and lower productivity jobs will be moved out of Singapore. Within Singapore, these jobs will be increasingly filled by foreign workers as companies are unable to attract enough Singaporeans to take on these positions as in figure 5.

18. This process is repeated for every generation. Every generation, with a combination of local and foreign workforce working together to win the next better investment for this generation and the next. Every generation, working hard to upgrade the skills to take on the higher skilled jobs progressively, earning higher pay in the process.

19. And throughout the process, making sure that the red bricks that represent the Singapore core remain the foundational pillars of our workforce.

20. Is this story farfetched? No. This was the story of electronics to semi-conductors that I shared at the last Parliamentary Sitting.

21. Esther Ng and Alice Low went from operators in Texas Instruments in 1969 to a document control assistant and a technician in the yield enhancement lab of Micron, respectively, earning higher wages than when they first started. They have since retired, and both have contributed to developing the industry for future generations to benefit from.

22. Our local businesses have also benefited from attracting high quality investments. Local SME CK Shipping went from a traditional logistics player to a specialised aerospace logistics provider for SAESL, a joint venture between Rolls Royce and SIA Engineering. CK Shipping also worked with Enterprise Singapore to reskill their workers to build capabilities in the new sector, allowing Singaporean workers to benefit from new opportunities created.

23. Esther, Alice and CK Shipping would not have risen in their stations had we not attracted new investments and progressively upgraded our economy.

24. What was true for semi-conductors and shipping is true for all sectors. Today, we are seeing the same story unfold in data, digitalisation and ICT.

25. This is what we are doing to grow new sectors like Advanced Manufacturing and Agri-Technology, and to transform our existing sectors like logistics and hospitality. Our fresh graduates from universities and polytechnics are progressively filling up these higher skilled, and higher paying jobs.

26. And we will step up our mid-career upgrading programmes for our middle-age workers to keep pace with these new technologies and industries.

27. We need a balanced approach to our talent strategy. Too many foreign workers, and not necessarily just the lower skilled one - our local workforce feels overwhelmed. Too few, our local enterprises and workers are unable to achieve scale or competitiveness for the global market.

28. Hence, it is a strategy that requires constant fine-tuning to get the balance right for enterprises and workers.

29. Beyond quantity and quality, we must also diversify our foreign manpower sources. There are good reasons for this.

30. From a business continuity perspective, we must manage the risks of overly relying on any particular source for any particular type of foreign manpower. From a social perspective, we must manage the externalities associated with too high a concentration of any particular foreign labour source.

31. Singapore is a diverse, cosmopolitan and inclusive society. But we also must not ignore the public discomfort that can surface with too high a concentration of any particular foreign worker group.

32. We are keenly aware of these challenges. Again, this is a work in constant fine-tuning based on the acceptance of foreigners by our society and the manpower needs of our companies.

33. We will also ensure that Singaporeans are fairly treated. We have the Fair Consideration Framework, which we tightened recently. We will not hesitate to act against companies that discriminate against Singaporeans.

34. To grow our economy and job opportunities, we will always need a certain foreign complement, both in terms of quality and quantity. But to keep it to a manageable level, we must:

a) First, continuously improve the skills and productivity of our Singaporean workers. We are doing this through our education system and SkillsFuture for lifelong learning, and we will continue to invest in these areas.
b) Second, we must manage the number and quality of the foreign complement to strike a good balance between economic needs and social acceptance.
c) Third, we must ensure that Singaporeans are treated fairly at work. Errant companies who treat their Singaporean workers unfairly can expect to face enforcement action and penalties.
d) Last but not least, progressively enable more and more Singaporeans to take on the higher paying jobs from our investments.

35. This is how we transformed ourselves from Third World to First, and how we will secure a brighter future and better lives for all Singaporeans.

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