Sunday 30 December 2012

Tight foreign worker policy 'could stifle growth': Singapore Business Federation

Business federation wants labour rules calibrated in targeted approach
By Jonathan Kwok, The Straits Times, 29 Dec 2012

SINGAPORE'S largest business grouping yesterday sounded its loudest alarm yet over the Government's tighter labour policies.

The Singapore Business Federation (SBF), representing more than 18,000 firms, warned that the foreign worker policy could stifle economic growth, drive some businesses to the wall and others overseas.

It said the Government's goal of higher productivity could not compensate for labour shortages in the short term.

The SBF also warned that the official 2 per cent to 3 per cent a year productivity growth target may not be achievable in a developed nation such as Singapore.

The Government has progressively imposed tougher restrictions on foreign worker numbers and urged firms to focus on productivity.

"Given the shortage of local workforce, foreign manpower is integral to the workforce," SBF said. "Singapore should continue to keep its door open to them. This approach will enable the Singapore economy to remain competitive and dynamic to fuel higher standards of living for all Singaporeans."

It said the "foreign manpower policy should be calibrated in a targeted approach".

The Government has acknowledged the tight labour market.

In a blog post yesterday, Acting Manpower Minister Tan Chuan-Jin said that overall, the labour market will continue to remain tight, if not become tighter, next year. "The pressure on businesses to expand through product innovation and making their workforce more productive will be more intense," he said.

The SBF held a briefing to present its wide-ranging position paper on population issues. It had been invited to give its views by the Government's National Population and Talent Division (NPTD).

SBF chief operating officer Victor Tay warned of the side effects of the tighter foreign labour policy such as higher costs for businesses and residents.

Innovation will be hampered, and the service sector could suffer from a lack of manpower, leading to a drop in service standards at hotels and restaurants.

In charting population policy to meet Singapore's economic and social needs, SBF talked of taking a short-term, mid-term and long-term approach to the issue.

In the short term, SBF said local firms recognise Singaporeans should be the core of the workforce, and suggested that the Government offer more help to firms to tap on retirees and housewives.

But it wants Singapore to remain open to foreign labour, pointing out that their presence can help locals move up the economic value chain.

For the mid-term, SBF urged a focus on productivity. It called for the development of industry clusters, where big firms can transfer knowledge and raise the productivity of their suppliers.

In the long term, a good-quality local workforce can be achieved with the Government's support of marriage and parenthood.

Some economists said a return to a liberal foreign labour policy would be unnecessary.

United Overseas Bank's Mr Francis Tan said: "We can meet our economic targets by continuing the programmes of increasing labour productivity by using technology and better systems design - all without the need to have more foreign workers."

Companies are adapting by continuing to move lower-value operations to neighbouring countries like Malaysia and Indonesia. "I think this will continue now in a more accelerated fashion," said SBF chief executive Ho Meng Kit.

Printing firm Winson Press' CEO Tan Jit Khoon said he has difficulty in hiring for some positions."Productivity growth needs time to realise," he said, adding that he is not asking for a reversal of the policies but hopes that they will not be tightened further.

Businesses urge Govt to review productivity target
1-2% target 'more realistic in long term' given poor economic conditions, says SBF chief
By Wong Wei Han, TODAY, 29 Dec 2012

More than two years after the Government had laid down its productivity growth target for the next decade, businesses here are now calling for a review: The 2- to 3-per-cent target is a "stretch", the Singapore Business Federation (SBF) said, given that economic conditions have taken a turn for the worse since 2010.

Yesterday, the SBF - which represents more than 18,000 companies, local and foreign business chambers and key industry associations - presented to the media its Position Paper on Population, which has also been submitted to the National Population and Talent Division (NPTD). The NPTD is in the midst of preparing a White Paper on population issues.

The SBF paper also made several recommendations, including greater Government support and incentives for companies to offer flexible work arrangements and parental leave.

SBF Chief Executive Officer Ho Meng Kit said: "Unlike other developing economies, inefficiencies in our economy have been largely taken out. So how do we edge out a 2- to 3-per-cent productivity growth? It's going to be tough … In my view, 1 to 2 per cent is more realistic in the long term."

SBF Chief Operating Officer Victor Tay pointed out that, unlike developing economies, "Singapore is a small nation with efficient logistics, transport system and business processes which are heavily digitised through nation-wide infrastructure".

Reiterating that businesses support the national imperative to raise productivity, Mr Tay nevertheless said: "The low hanging fruits of productivity have mostly been reaped, and the remaining room for productivity improvement becomes less for a developed economy like ours."

The SBF's call for a review of the target comes amid cries for help from companies, especially small and medium enterprises, which are facing a manpower crunch as the Government moderates the inflow of imported labour.

Mr Tay said: "Companies are also facing resource and manpower constraints. They have to choose between meeting business needs and improving productivity - and that predicament makes the productivity growth target all the more difficult to realise."

The productivity growth target was announced in February 2010, after it was proposed by the Economic Strategies Committee. Mr Tay pointed out that Singapore's economy grew by a blistering 14.7 per cent in 2010. Since then, the economic conditions have soured and productivity improvements have been lacklustre, even dipping into negative territory at times.

In September, Acting Manpower Minister Tan Chuan-Jin acknowledged that achieving 2- to 3-per-cent productivity growth is a stretched target. But he reiterated the need to press on with the restructuring efforts, so that Singapore will "be in a good position to achieve higher wages for all Singaporeans and remain competitive at the same time".

Writing on his blog, Mr Tan yesterday noted that the Republic's year-on-year rate of growth in employment level has exceeded the rate of GDP growth in the past four quarters.

"This has resulted in negative productivity growth. This means that with every additional worker employed, our economy became less productive on average. So businesses will need to create jobs that are higher-value and higher-skilled for our increasingly educated labour force," he said.

The Government had previously noted that, compared to countries such as the United States and Japan, Singapore's productivity level is about 50 per cent to 60 per cent lower for key sectors such as manufacturing, services and construction.

Also, while Singapore's economy grew about 8.2 per cent from 2004 to 2007, and the size of the workforce increased an average of 6.5 per cent from 2006 to 2009, productivity growth slowed to 0.8 per cent per year from 1999 to 2009.

Minister of State (Trade and Industry) Teo Ser Luck said his ministry will further engage the SBF and its members to understand the challenges they are facing. "Where the different challenges are from could mean whether our productivity programmes are effectively implemented. We take SBF's feedback seriously, and going forward we are open to discussions in order to figure out how best to assist these businesses to meet that target," he said.

Ang Mo Kio GRC MP Inderjit Singh, who sits on the Government Parliamentary Committee for Finance and Trade and Industry, disagreed with the SBF's stance.

Mr Singh said: "Developing economies in fact have more problems improving productivity due to their reliance on external input (of labour). A developed country will have a better chance, because it's better equipped for technologies and innovations. We have the right capabilities and trained workforce to make it happen. Companies are in a dilemma right now only because they're in a transitional period. They are used to their old ways and changes are never easy."

Dr Tan Khay Boon, a senior lecturer at the Singapore Institute of Management, outlined the myriad of ways that firms can raise productivity. In the short term, firms can, for example, offer higher wages or flexible working hours to attract those who are not working to join the labour force.

"In the long term, firms will have to use capital intensive and high technology production methods to reduce dependency on labour. These firms may consider retaining knowledge-based production in Singapore and shifting land and labour intensive productions to neighbouring countries," he said.

Companies 'receptive' to parental leave: SBF
By Wong Wei Han, TODAY, 29 Dec 2012

Asking for greater support from the Government to help companies implement family-friendly policies, the Singapore Business Federation (SBF) said companies would be "receptive" to one week of parental leave, carved out of the 16 weeks of maternity leave that are currently offered to mothers.

In its Position Paper on Population, the SBF suggested that the existing duration of maternity leave remain but allow either parent to take one week of the allocated leave. It also suggested child care leave of two days for parents with a child aged between 7 and 12, and retaining the existing one week unpaid infant care leave for parents with a child who is younger than two years old.

"Legislated paternity leave should take into account current company provisions as otherwise leave of absence will be unnecessarily prolonged," the SBF said. It also called on the Government to incentivise employers to support flexible work arrangements. More affordable child care is also necessary to create a social support system conducive to greater workforce productivity, it noted.

Productivity schemes to better help SMEs
By Woo Sian Boon, TODAY, 31 Dec 2012

The Ministry of Trade and Industry (MTI) will announce several recommendations over the next six months to help small and medium enterprises (SMEs) achieve the country's long-term productivity growth target of 2 to 3 per cent annually over the next decade, said its Minister of State Teo Ser Luck yesterday.

The Ministry will also unveil recommendations to boost the talent pool of these companies by attracting local talent from educational institutions. 

Last Friday, the Singapore Business Federation (SBF), representing more than 18,000 firms, warned that the foreign worker policy could stifle economic growth, drive some businesses to the wall and others overseas, and that the 2 to 3 per cent annual productivity growth target set for Singapore may be too high.

Addressing the concerns, Mr Teo said he understood the challenges that companies, especially SMEs, face in restructuring their business models and move towards productivity to increase growth. Citing Germany as an example, Mr Teo said that time would be needed for businesses to make this transition. 

"Even if it is not 2 to 3 per cent, if you're near to two and you're hitting a certain productivity increase, I think as it builds up, cumulatively, we can still reach a certain target," he added.

Mr Teo said that the MTI has been reviewing its productivity schemes to better ensure that SMEs, which form the lifeblood of Singapore's economy, can tap and effectively utilise them to achieve their targets. SMEs account for half of Singapore's gross domestic product and employ seven in 10 of the workforce here.

Mr Teo said that "subject to all the processes and tie-ups between agencies", the MTI hopes to roll out the recommendations in the first half of next year. In the meantime, he reiterated that the MTI will continue to work closely with the SBF and SMEs to meet their needs, while looking into how the revised schemes can be catered to specific sectors.

Mr Teo was speaking to reporters at Punggol East, where he also announced measures to enhance road safety in the constituency.

SBF Position Paper on Population
Taking Stock, Looking Forward -The Manpower Blog

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