Extend skills upgrading to foreign workers

Extend skills upgrading to foreign workers

by Chia Siow Yue and Ng Pei Yi, TODAY, 24 Oct 2011

Foreign workers are a controversial yet essential factor in the Singapore economy. The recent General Election revealed resentment among voters over the perceived crowding-out of public spaces and services by foreigners. From a reverse perspective, there has been long-standing criticism that Singapore must do more to protect foreign workers from mistreatment.

The Government has given numerous assurances to Singaporeans that the influx of foreigners will be increasingly controlled and limited. Most recently, the Ministry of Manpower's Addendum to the President's Parliamentary Address affirmed this.

Businesses report that work permits are harder to obtain and anecdotes suggest that getting permanent residence too has become more difficult. On the supply side, there are clear signs that the traditional labour-sending countries are tightening up flows. Many other labour-receiving cities seek to attract both higher- and lower-skilled workers.

In view of both national concerns and trends from abroad, Singapore's foreign worker policies may need a relook. What would be the economic consequences? Will Singapore remain an open society that welcomes foreigners?

Amid the controversies, some realities need to be reinforced. The possible answers relate not simply to the number but also to the pace, productivity and protection of foreign workers.

An ongoing study, supported by the International Development Research Centre, found that in the last decade, particularly from 2006 to 2009, the country's non-resident labour force rose very sharply with a double-digit annual percentage growth. The high point was 21.5 per cent.

The provision of public amenities in transport and housing did not keep pace. It was this real gap in amenities that unsettled many Singaporeans, rather than a mental xenophobia. The Government's response has correctly been to speed up the upgrading of those amenities.

Another promise made by Manpower Minister Tharman Shanmugaratnam was to cap the overall share of foreigners in the workforce at no higher than one-third over the long term. This may have been a political necessity in view of voter sentiment. Keeping that promise may, however, prove more difficult as this could have a negative impact on the overall economy as well as businesses that rely most on foreign workers.

Economic growth requires higher inputs of factors of production, of which labour is a key component. The Singapore workforce is constrained in terms of numbers, especially among the young. Among older Singaporeans, their low level of formal education is a huge constraint. The reality is that Singapore needs foreign workers.

This brings about a second critical question, not of numbers but of the skill, value and productivity of foreign workers. Currently, only 20 per cent of foreign labour in Singapore is in higher-skilled, better-paid jobs. Most are in jobs that are low-skilled and lowly paid, doing the dirty, dangerous and demeaning jobs ("3D" jobs) that most Singaporeans shun.

The challenge of productivity is not an issue that applies solely to Singaporeans. Given that our economy needs foreigners but our society wants to limit their number, the productivity of foreign workers must be addressed.

The Economic Strategies Committee report has recognised the need for higher productivity as a measure to reduce reliance on foreign labour. A key policy instrument that the Government has deployed is the increase in foreign worker levies. The intention is to push employers to get their existing local staff to work efficiently, upgrade their skills and to rely more on technology and innovation. This is the right goal, but there can be unintended ramifications when applied across the board.

Companies need to watch their wage bills especially given inflation and reduced global economic prospects ahead. Consequently, when levies increase, a common response is to decrease the pay offered to foreign workers. Lower wages, however, can lead to a failure to attract better-qualified foreign workers, and result in a negative cycle.

Conversely, if foreign workers can be made more productive, then the quantity can be eased. As such, if the political imperative is to have fewer foreign workers, this should be in tandem with efforts to help foreign workers to be better-skilled and more productive. A simple step forward could be to extend the current skills-upgrading programmes to also include foreign workers.

This is seldom considered today because foreign workers are viewed primarily as cheaper economic stop-gaps. A more inclusionary approach has to be taken. Singapore must recognise that foreign workers are legitimate stakeholders to begin to address their productivity and attract the higher-skilled. This will aid in driving the redesign of 3D jobs.

This is timely given that the available foreign supply of low-skilled labour from Asia is very likely to shrink as these labour-surplus countries are undergoing demographic transitions. Focusing on increasing productivity can also trigger measures that better value and protect these workers.

At present, discussion about foreign workers is circumscribed by sentiment and centres on issues of quantity - what is too much and which sectors will get them. Looking at the pace at which foreign labour is introduced as well as their productivity and protection can take us beyond a numbers game. Singaporeans need to move beyond denying their need for foreign workers and instead begin to figure out how best to manage them and ensure they can create value for the economy.

Dr Chia Siow Yue is a senior research fellow at the Singapore Institute of International Affairs (SIIA). Ng Pei Yi is a research intern at SIIA.

The thorny issue of upgrading foreign workers
Lofty idea, but who will fund the retraining?
Letter from Tan Kee Lin, TODAY, 1 Nov 2011

I refer to the commentary "Extend skills upgrading to foreign workers" (Oct 24).

While this is a lofty thing to do, I wonder whether it is practical and a priority in this uncertain economic climate, where Singaporeans may start to lose jobs if businesses become unprofitable.

I also have my doubts. Firstly, where would the money for retraining foreign workers come from? If from employers, the extra costs might as well go to the wages of local workers, who should rightly be given job priority.

If the money were to come from the Government, it would come indirectly from taxpayers. Why should Singaporeans pay for the training of foreign workers who compete with them for jobs?

Secondly, if, according to the authors, the jobs held by foreign workers are shunned by Singaporeans, then training would increase the skill levels of these jobs, the salaries and thus the respectability and attractiveness of the jobs to Singaporeans. Why then do we need to train foreign workers? The training can go to Singaporeans instead.

What we need is a mindset change in Singaporeans: To not consider vocational jobs "demeaning". One way to do this is to redesign vocational jobs, to make them pay as well as, or almost as well as, white-collar jobs.

The other commentary, "The paradox of the new elite" (Oct 24), stated: "Germany still has robust protections for its workers and one of the healthiest economies in Europe.

"Children at age 10 are placed on different tracks, some leading to university and others to vocational school ... Those attending vocational school often earn as much as those who attend university."

Furthermore, if we could develop a work culture like in Japan, where everyone takes pride in his job, no matter how simple or vocational it is, we would not have a problem of Singaporeans not wanting to take up vocational jobs.

The emphasis should be on education - and re-education - to change mindsets, not on bringing in more unskilled foreign workers, which may create more problems, social or otherwise, for Singapore.

Less need to train foreigners, if we let only the qualified ones in
Letter from Rick Lim Say Kiong, TODAY, 1 Nov 2011

I am both perturbed and bemused by the suggestion to "Extend skills upgrading to foreign workers" (Oct 24).

As the commentary mentioned, Singapore does need some foreign labour. So long as these foreign workers are here, they should be given protection from mistreatment and unfair work conditions.

However, when it comes to skills and knowledge upgrading, we must question the intention: Do we train them to reduce reliance on them in the long run? Or, in a bid to reduce this dependence, we spend training dollars at the expense of the local workforce?

The writers stressed that foreign worker productivity must be addressed. I agree. The solution is to allow only qualified foreign workers into our workforce.

For example, many front-line service jobs are serviced by foreign workers who cannot converse in English, leading to a worry that productivity in this industry will decline in the long term.

The Service Literacy Test (SLT), conducted by the Workforce Development Agency, was set up for this reason.

Yet, many employers hesitate to send foreign workers for English courses and the SLT, citing costs, doubts over whether the workers can pass the test and that it is unnecessary.

Sending foreign workers for other courses here may create more, unforeseeable quandaries for employers. The solution lies with the Manpower Ministry.

With a policy which would ensure that only skilled foreign workers are issued work permits, we can reduce our foreign manpower, reduce the need to train them more than necessary and allocate more of the training budget to upgrade local labour instead.

Finally, it would be remiss of me to not comment on the two writers' regard for jobs that Singaporeans shun as "demeaning".

Jobs that foreign workers do may be dirty and dangerous, but they are by no means undignified. The use of this coarse word to describe such jobs reveals how portentous one can be, even if it is only a personal view.

Where is the rationale for upskilling foreign workers?
Letter from Chia Hern Keng, TODAY, 31 Oct 2011

The proposal to "Extend skills upgrading to foreign workers" (Oct 24) is controversial because such training would apparently be paid for, partly or fully, with our national resources. What exactly can be accomplished?

The commentary mentions that 80 percent of the foreign workforce is lower skilled. So what will the upgrading of these lower-skilled workers imply ultimately? It is just a case of upgrading the job type of a worker.

That a foreign worker is promoted through skills upgrading means his previous job needs to be filled by another foreign worker. Where is the reduction in foreign workers and increment in productivity to be seen?

Increased productivity appears only when workers can be trained for a restructured, advanced work environment such as through automation.

Surely, the authors do not think it practical for foreign, menial workers to be prime candidates for such fairly advanced or professional skill upgrading.

The two subjects of skills upgrading and productivity have always been conflated in our national productivity drive.

It is time the authorities make a distinction between skills upgrading to improve employability versus skills upgrading to raise productivity. They are not the same.

The key element in raising productivity is when human input is made more efficient and valuable such as through computerisation, better ergonomics in work flow, innovation in products and services and efficient use of alternative energy, amongst others.