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S’pore needs foreign manpower for the next 14 years: economist

To keep the wheels of Singapore's economy turning, the city-state needs to continue relying on foreign manpower, said SIM University (SIM) associate professor and labour economist Randolph Tan.

Speaking on Singapore's employment market for the 2013 Economic Outlook Forum held at SIM on Friday morning, Tan said that if the government were to reduce the country's reliance on foreign labour "too quickly and too precipitously", it would likely cause unwarranted dislocation to the Singapore economy.

"In other words, whether you like it or not, the foreign manpower policy actually produces certain benefits and if this reliance is dismantled prematurely, then that dismantling process could actually hurt the economy and cause certain fractures… for instance, our ability to absorb manpower into the economy," he said.

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Tan also challenged the idea that getting rid of foreign manpower would encourage local companies to employ more Singaporeans as it is not a matter of "one-to-one replacement". Instead, he noted, it would have been impossible for Singapore to have met the requirements of job demand in the past seven years since the first quarter of 2006, if the government had not turned to foreign manpower in the first place.

However, he pointed out that if Singapore were to eventually stem the influx of foreign manpower, it would take approximately twice as long as it took to accumulate them — in other words, it would take an estimated 14 years for Singapore to be completely self-reliant.

"[But], it does nobody any good to be self-reliant… foreign manpower is responsible for a lot of benefits that we are seeing today and dismantling that reliance too quickly will likely mean that a lot of gains that we made in the last seven years will be lost — not just diminished, but some of them will be completely lost," he noted.

Unemployment can be a boon?

In his 45-minute talk, Tan, who is also the head of business at UniSIM, also addressed the unemployment situation in Singapore.

Drawing the example of the 2009 recession, Tan pointed out that although it was the most severe recession Singapore had suffered on record, the impact on the labour market was actually the mildest —proving that there is no correlation between economic uncertainties and the domestic labour market.

Linking this phenomenon to the presence of foreign labour once again, Tan said, "For some reason or another, our foreign manpower policy has actually done something to immunize the local job market… and this is something we must be careful to try and preserve and not fracture with too rapid dismantling of [the foreign manpower] policy".

He added that Singapore should also change our perspective towards unemployment, as despite unemployment being a "tragedy" for the individual; it serves as a boon to the economy.

Calling it a "creative destruction" process, he said, "[Unemployment] is a good thing because you get the churn… to relocate people from jobs which are not productive and not efficient to jobs that are productive and much more efficient."

"We need an unemployment pool that is churning rapidly in order to have a healthy economy… [and] we should not stop people from getting laid off… [but rather] ensure that they get reemployed quickly," he added.